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Regional Oral History Office University of California

The Bancroft Library Berkeley, California

Government History Documentation Project

Ronald Reagan Gubernatorial Era

James M. Hall
SUPPORTING REAGAN: FROM BANKS TO PRISONS

Interviews conducted by
Nicole Biggart and Gabrielle Morris
1978, 1984, and 1985

All uses of this manuscript are covered by a legal
agreement between the University of California and James
M. Hall dated November 24, 1986. The manuscript is
thereby made available for research purposes. All
literary rights in the manuscript, including the right
to publish, are reserved to The Bancroft Library of the
University of California at Berkeley. No part of the
manuscript may be quoted for publication without the
written permission of the Director of The Bancroft
Library of the University of California at Berkeley.

Requests for permission to quote for publication
should be addressed to the Regional Oral History Office,
486 Library, and should include identification of the
specific passages to be quoted, anticipated use of the
passages, and identification of the user. The legal
agreement with James M. Hall requires that he be
notified of the request and allowed thirty days in
which to respond.

It is recommended that this oral history be cited
as follows:

James M. Hall, "Supporting Reagan: From Banks
to Prisons," an oral history conducted 1978,
1984, and 1985 by Nicole Biggart and Gabrielle
Morris, Regional Oral History Office, The
Bancroft Library, University of California,
Berkeley, 1986.

Copy No.

James Hall being sworn in as Human Relations Secretary, 1 February 1971.
Left to right: Hall, Governor Reagan, Tom McMurray, Alex Cunningham.

California Department of Public Works photo

TABLE OF CONTENTS — James M. Hall

PREFACfi i

INTERVIEW HISTORY iii

I EXPERIENCES IN CAMPAIGNS, BANKING, AND THE GOVERNOR'S CABINET:

AN OVERVIEW 1

II PERSONAL BACKGROUND, 1940s-1966 25

Navy Staff Work; Law School; MCA, Inc. 27

Pete Wilson, Arnholt Smith, and Other San Diego Republicans 30

Republican Associates; Gaylord Parkinson as State Chair 32

County Chairman for George Murphy's 1964 Senate Campaign 34

Murphy and Ronald Reagan 37

Liaison Between the 1966 Finch and Reagan Campaigns 40

III SUPERVISING CALIFORNIA BANKS, 1967-1970 43

Minority Economic Development 43

Wells Fargo Goes National 46

Cal-Job Program 46

George Deukmejian on the Cal-Job Board 49

Other Board Members 51

Staffing; Community Reactions 52

Realities of Bank Regulation 54

Technical Assistance 55

IV THE OFFICE OF ECONOMIC OPPORTUNITY AND THE GOVERNOR'S OFFICE 59

V BUSINESS AND TRANSPORTATION AGENCY, 1970-71 62

Secretary Gordon Luce Returns to the Private Sector 62

Hall Becomes Agency Secretary 65

Discussion with Governor Reagan 69

Personal Staff 71

Office Space Assignments 72

State Computers; Highway Patrol 75

Environmental Issues; Mutual Aid and Security 76

Economy Moves; Community Development; Problem at Savings and Loan 78

VI CABINET PROCESS: POLICY DECISION AND COMMUNICATION 81

VII HUMAN RELATIONS AGENCY, 1971-1972 89

Early Welfare Reform Efforts 89

Welfare Reform and Education Task Forces, August 1970 92
Hall Replaces Lucian Vandegrift as Agency Secretary; Relative

Merits of Business and Transportation 97

Confirmation Hearings • 100

Preparing to Implement Welfare Reform Task Force Recommendations 101
Formulating the New Welfare Program, January-February 1971;

Initiative Strategy 104
Governor Reagan Announces Reform; Seeking Waivers from the

Federal Government 106
Earl Brian's Management Style as Secretary of Health

and Welfare, 1973 109

Agency Deputies; Legal Strategies 110

Mental Health and Retardation Services 113

Prison Reforms; Governor's Vetoes 115

VIII CONSERVATIVE AND MINORITY CONCERNS 118

Pacific Legal Foundation, 1971 118

Opportunity Funding Corporation 119
Tax Limit Initiative, 1973, and National Tax Limitation Committee 120

Management Confusion in the Governor's Office 122

Barriers to Employment 124

Is Working in Government Worth It? 125

TAPE GUIDE 127

APPENDIX A - Memo, Hall to Governor Reagan, "Welfare Reform

Responsibilities," July 9, 1971 128

B - Hall speech to Third Annual Board Retreat , Interracial

Council for Business Opportunity, Los Angeles, 1972 (?) 130

C - Memo, Hall to Meese, "Development of Reagan

Administration Priorities," November 9, 1971 139

D - Report, the Governor's Manpower Policy Task Force,

Sacramento, California, August 1972. Cover and letter

of transmittal 141

E.- Table of Contents, Tax Reducation Task Force Report, 1972 144

INDEX 146

PREFACE

California government and politics from 1966 through 1974 are the focus of
the Reagan Gubernatorial Era Series of the state Government History Documenta
tion Project, conducted by the Regional Oral History Office of The Bancroft
Library with the participation of the oral history programs at the Davis and
Los Angeles campuses of the University of California, Claremont Graduate School,
and California State University at Fullerton. This series of interviews carries
forward studies of significant issues and processes in public administration
begun by the Regional Oral History Office in 1969. In previous series, inter
views with over 220 legislators, elected and appointed officials, and others
active in public life during the governorships of Earl Warren, Goodwin Knight,
and Edmund Brown, Sr., were completed and are now available to scholars.

The first unit in the Government History Documentation Project, the Earl
Warren Series, produced interviews with Warren himself and others centered on
key developments in politics and government administration at the state and
county level, innovations in criminal justice, public health, and social welfare
from 1925-1953. Interviews in the Knight-Brown Era continued the earlier
inquiries into the nature of the governor's office and its relations with
executive departments and the legislature, and explored the rapid social and
economic changes in the years 1953-1966, as well as preserving Brown's own
account of his extensive political career. Among the issues documented were
the rise and fall of the Democratic party; establishment of the California Water
Plan; election law changes, reapportionment and new political techniques;
education and various social programs .

During Ronald Reagan's years as governor, important changes became evident
in California government and politics. His administration marked an end to the
progressive period which had provided the determining outlines of government
organization and political strategy since 1910 and the beginning of a period of
limits in state policy and programs, the extent of which is not yet clear.
Interviews in this series deal with the efforts of the administration to increase
government efficiency and economy and with organizational innovations designed
to expand the management capability of the governor's office, as well as critical
aspects of state health, education, welfare, conservation, and criminal justice
programs. Legislative and executive department narrators provide their perspec
tives on these efforts and their impact on the continuing process of legislative
and elective politics.

Work began on the Reagan Gubernatorial Era Series in 1979. Planning and
research for this phase of the project were augmented by participation of other
oral history programs with experience in public affairs. Additional advisors
were selected to provide relevant background for identifying persons to be
interviewed and understanding of issues to be documented. Project research
files, developed by the Regional Oral History Office staff to provide a
systematic background for questions, were updated to add personal, topical, and
chronological data for the Reagan period to the existing base of information
for 1925 through 1966, and to supplement research by participating programs as
needed. Valuable, continuing assistance in preparing for interviews was
provided by the Hoover Institution at Stanford University, which houses the
Ronald Reagan Papers, and by the State Archives in Sacramento.

An effort was made to select a range of interviewees that would reflect
the increase in government responsibilities and that would represent diverse
points of view. In general, participating programs were contracted to conduct
interviews on topics with which they have particular expertise, with persons
presently located nearby. Each interview is identified as to the originating
institution. Most interviewees have been queried on a limited number of topics
with which they were personally connected; a few narrators with unusual breadth
of experience have been asked to discuss a multiplicity of subjects. When
possible, the interviews have traced the course of specific issues leading up
to and resulting from events during the Reagan administration in order to
develop a sense of the continuity and interrelationships that are a significant
aspect of the government process.

Throughout Reagan's years as governor, there was considerable interest and
speculation concerning his potential for the presidency; by the time interview
ing for this project began in late 1980, he was indeed president. Project
interviewers have attempted, where appropriate, to retrieve recollections of
that contemporary concern as it operated in the governor's office. The intent
of the present interviews, however, is to document the course of California
government from 1967 to 1974, and Reagan's impact on it. While many interview
ees frame their narratives of the Sacramento years in relation to goals and
performance of Reagan's national administration, their comments often clarify
aspects of the gubernatorial period that were not clear at the time. Like
other historical documentation, these oral histories do not in themselves
provide the complete record of the past. It is hoped that they offer firsthand
experience of passions and personalities that have influenced significant events
past and present.

The Reagan Gubernatorial Era Series was begun with funding from the
California legislature via the office of the Secretary of State and
continued through the generosity of various individual donors . Several
memoirs have been funded in part by the California Women in Politics Project
under a grant from the National Endowment for the Humanities, including a
matching grant from the Rockefeller Foundation; by the Sierra Club Project
also under a NEH grant; and by the privately funded Bay Area State and
Regional Planning Project. This joint funding has enabled staff working with
narrators and topics related to several projects to expand the scope and
thoroughness of each individual interview involved by careful coordination of
their work.

The Regional Oral History Office was established to tape record autobio
graphical interviews with persons significant in the history of California
and the West. The Office is under the administrative direction of James D.
Hart, Director of the Bancroft Library, and Willa Baum, head of the Office.
Copies of all interviews in the series are available for research use in
The Bancroft Library, UCLA Department of Special Collections, and the State
Archives in Sacramento. Selected interviews are also available at other*
manuscript depositories.

July 1982 Gabrielle Morris

Regional Oral History Office Project Director

486 The Bancroft Library
University of California at Berkeley

On behalf of future scholars, the Regional Oral History Office wishes
to thank those who have responded to the Office's request for funds to
continue documentation of Ronald Reagan's years as governor of California.
Donors to the project are listed below.

Anonymous
Margaret Brock
Monroe Brown
Edward V. Carter
Sherman Chickering
Aylett B. Cotton
Justin Dart*
William C. Edwards
James M. Hall
William Randolph Hearst
William Hewlett
Jacquelin Hume
Earle Jorgensen
L. W. Lane, Jr.
Gordon C. Luce
Norman B. Livermore, Jr.
Joseph A. and Gladys G. Moore
David Packard
Robert 0. Reynolds
Henry and Grace Salvatori
Porter Sesnon
Dean A. Watkins
*deceased

REAGAN GUBERNATORIAL ERA PROJECT

Advisory Council

Eugene Bardach James W. Leiby

Charles Benson Edwin Meese III

Nicole Biggart Sheldon L. Messinger

John Burns James R. Mills

Lou Cannon William R. Muir

Bert Coffey Charles Palm

Edmund Constantini A. Alan Post

Lawrence deGraaf Albert S. Rodda

Enid Douglass Ed Salzman

Harold E. Geiogue Paul Seabury

James Gregory Alex Sherriffs

Ronald Grele Michael E. Smith

Gary Hamilton A. Ruric Todd

Mary Ellen Leary Molly Sturges Tuthill

Eugene C. Lee Raymond Wolf ingei

Interviewers

Malca Chall
A.I. Dickman*
Enid Douglass
Steve Edgington
Harvey Grody
Harry P. Jeffrey
Ann Lage
Gabrielle Morris
Sarah Sharp
Julie Shearer
Stephen Stern
Mitch Tuchman

^Deceased during the term of the project

iii

INTERVIEW HISTORY

As a department director and later cabinet secretary from 1967 to 1972,
James Hall was a strong exponent of Governor Ronald Reagan's principles of
encouraging a free-market solution to provision of public services and
limiting the role of government. Hall's discussion in the following interview
of his experiences in three California state agencies provides valuable
insights into organizational methods and the nature of staff work. He also
explores some frustrations he encountered in dealing with the governor's
office and the Department of Finance within the agency-cabinet management
method developed by the Reagan administration.

Hall comes from a family tradition of community service and had chaired
southern California campaigns for George Murphy and Robert Finch as a young
attorney in San Diego. After the gubernatorial victory in 1966, Holmes Tuttle,
one of Reagan's key advisors, told Hall it was his duty to go to Sacramento
and help. So Hall said okay.

His first assignment, as Superintendent of Banks, included increasing
the efficiency of bank regulation and licensing, and setting up a significant
minority economic-development program. Hall confesses to becoming so involved
in this lending and technical-assistance program that he arranged for it to
continue under his supervision when he became, first, secretary of the Business
and Transportation Agency and, later, secretary of the Human Relations Agency.

In the banking department, he became close to Gordon Luce, another
San Diegan and his boss as head of Business and Transportation. When Luce
returned to the private sector in 1968, Hall was the logical choice to succeed
him. He describes briefly his interest in establishing control of the agency's
budget, developing public transit plans, and other issues. He also spent
considerable time quarterbacking Robert Carleson, a deputy in one of his
agency's departments, and others who were assigned to the governor's welfare-
reform task force in the summer of 1970.

For Hall, it was "fundamentally important to the governor to succeed ...
to get this thing under control." A few months later, Hall was appointed
secretary of the Human Relations Agency to supervise the resulting plan to
overhaul California's administration of welfare, and Carleson became director
of the Department of Social Welfare, in charge of carrying out the plan.
Hall's description of the task-force process and strategies for winning
legislative and federal approval of its recommendations are vivid and
informative on the varied views and approaches of the parties involved.

As a member of Reagan's cabinet, Hall became concerned that the governor
was not "hearing all the information he needs in order to reach a logical
conclusion." There was great time pressure, he adds, as well as a "tension
system between the governor's personal staff and the agencies." Most of the
controversy, in Hall's view, "was that we weren't getting close enough to
the mark that Reagan wanted made" . . . and "So we had this confusion of
management and I could never get the story across that this was destructive."

Mr. Hall was an interested and cooperative participant in the oral history
process. Two interviews were recorded with the Reagan Gubernatorial Era
Project in 1984 and 1985 to discuss specific issues in the agencies he headed
for the governor. The first was a brief session in his office at Kindel &
Anderson, attorneys, in downtown Los Angeles, shortly before he left on a
consulting trip to Saudi Arabia. The second was a four-and-a-half hour
marathon in the study of his handsome San Marino home, where several cartons
of papers from Sacramento were beside the desk for reference. From them he
selected several items, which are included in the appendix.

In addition, he readily agreed to including in this volume an interview
he had recorded in 1978 with Nicole Biggart of the University of California
at Davis for a sociological study of authority in the governor's office.*

He and Mrs. Hall each audited the 1978 tape to fill in gaps in the sketchy
transcript. He continued with a careful review of the edited 1984 and 1985
transcripts, adding occasional clarifying details.

Gabrielle Morris
Interviewer-Editor

July 1986

Regional Oral History Office
486 The Bancroft Library
University of California, Berkeley

*Governor Reagan, Governor Brown, Gary G. Hamilton and Nicole Woolsey Biggart,
Columbia University Press, New York, 1984.

I EXPERIENCES IN CAMPAIGNS, BANKING, AND THE GOVERNOR'S
CABINET: AN OVERVIEW

[Interview 1: February 4, 1978] ##

Biggart: First of all, tell me how it was you ever came to know Ronald Reagan.
Or his administration.

Hall: I got out of law school in 1962 and went to work for Luce, Forward,

Hamilton and Scripps in San Diego, which is my home town. Immediately
fell into political activity 'cause Pete Wilson and I had been
classmates and my family had known Dr. [Gaylord] Parkinson for a
long time, and just generally, you know. So I got recruited into
various things, and I was on the board of Republican Associates in
San Diego. Gordon Luce and Dick Capen and Herb Klein and [Lyn]
Nofziger were down there at that time. Peter Kaye at the Union —
various people. Anyway, it was quite a Republican mafia.

In late '63, I was recruited as George Murphy's county chairman
for that campaign. So I organized and ran the San Diego County
campaign for George Murphy. He was the only winner on a statewide
basis that year, I think. So immediately that made me a political
expert since I had a winning candidate. Reagan had come in to speak
for Goldwater during that campaign and because of the show-business
background of both of them, Murphy had known Reagan and vice versa,
there was a relationship. However, Murphy was not a star. I always
felt that there was some professional jealousy because Murphy had
always been a strong Republican, Reagan had come lately to the
Republican party and was out making speeches for Goldwater. There
was not the best of personal relationships, at least that is what I
sensed. I got a gauge — or I drew an opinion at that time — that maybe
Reagan was not of great substance but just an interesting speaker.

//#This symbol indicates that a tape or a segment of a tape has
begun or ended. For a guide to the tapes see page 127.

Hall: Then in '65. apparently, they began to put together the campaign.
Reagan came through San Diego making appearances and one of the
appearances was a garden party of some sort, at which he fielded
questions from the crowd. It was a Republican crowd with a mix of
conservatives and liberals, and each side was throwing the hardest
pitches they could, and he was doing a great job of fielding these
questions. He was not coming down strictly on the right-wing
side nor was he pandering to the liberals. He was responding in
what I considered to be a very, very politic way, and it was at that
point that I concluded that this guy had great political talent.
He was very, very good at handling these emotional issues, having
come off the Goldwater campaign, which was so disastrous. And the
whole Rockefeller bit was still very fresh in everybody 's mind. So
there was a great deal of potential problem area for any politician.
And a lot of politicians were falling by the wayside because of that.
They couldn't handle the internal dissension that existed in the
Republican party at that time. But Reagan did a good job of it.

Into the campaign year of '66, I had been practicing and spent
so much time in '64 that I really couldn't take a front position
in the campaign and I told everybody that. Then Finch came around
as lieutenant governor — obviously, Bob had been chairman for
Murphy statewide in '64 so I had gotten to know him quite well, and
I had met with Haldeman and these guys up here trying to to get the
Finch campaign off the ground. I also had a good relationship with
Gordon Luce in San Diego, who was Reagan's San Diego chairman. So
I kind of acted as liaison, to a certain extent, between the Finch
campaign and Reagan campaign in San Diego. Basically it was the
conservatives for Reagan and the liberals for Finch. And they dearly
loved to fight with each other all the time, and somebody had to be there
to communicate back and forth to the extent that was possible.

Biggart: Was there much coordination between their campaigns?

Hall: They were basically separate campaigns, but every once in a while

there would be some joint activity or there would be a necessity for
the joint finance committee to consent to some money deal. And in
that way, I met Phil Battaglia and the Reagan campaign and the
Reagan staff. In December, after the election, December '66, I was
encouraged to come to Sacramento just to meet everybody, theoretically.
Gordon Luce, Ed Gillenwaters , and I traveled to Sacramento together.
And I made it clear to everybody, Phil Battaglia and the other people
I talked to, that I was not looking for an appointment, that I didn't
want an appointment, that I had a very good thing going in San Diego.
I was in line for a partnership at Luce, Forward, I wanted to
practice law — all of which was true. And they kept saying, "Well,
keep it in mind."

Then I was invited to the swearing in, the midnight investiture
and after that Gordon got me aside with Holmes Tuttle and chastised
me in front of Tuttle' for not coming on board. They wanted me to
be commissioner of corporations, and I definitely told them that
that was unrealistic. I had only been practicing law for five years
so I knew something about securities law, but it was not sensible
for me to — it would be a bad thing for the bar and a bad impression
for the administration. And I repeated a lot of other reasons why
I didn't want to do it. And two or three days later, Tuttle called
me and said, "Son, it's your duty. We've spent a lot of time and
money getting this guy elected, he has to have people around him who
will follow his principles, and so forth. And it's your duty." So
the trumpet blew.

Is that why you did it? It was a sense of duty?

Yes. He got the key word. So I went to Tom Hamilton, who was the
senior partner and repeated what Tuttle had said and he said, "Well,
it ought to be a lot of fun. Why don't you go and tell them you'll
participate." So with that leeway, they went through the routine on
the commission of corporations thing again, and I said, "That is not
realistic; I don't have stature in the bar that would permit that."
And then they said, "Well, what about superintendent of the banks?"
I had never heard of that position. So I did a little quick study
and it appeared under the circumstances that it was appropriate, I
could learn fast enough and needed some guidance within the state
banking department so I accepted that position. We had to go through
several interviews there — has anybody told you about the interview
process?

I'd like to hear about your experience.

Well, they had a very prestigious group of people. Cy Rubel, who
had been chairman of the board of Union Oil. Cy Rubel, very
conservative individual; Leonard Firestone, Salvatori, you name
them — Tuttle, Ed Mills, Taft Schreiber, lots of guys. Almost all
conservative. They conducted an interview session at the Los Angeles
Club out on Wilshire, and they arranged it so that they had about
twenty chairs in a circle with an empty chair, not in the middle of
the circle, but on the edge of the circle. I had Leonard Firestone
on one side and Rubel on the other and there was a conservative and
a liberal directly across and then the scatterings around the edges.
You'd get a conservative question and you'd get a liberal question.
It was the same kind of thing Reagan had been going through. You
had to express yourself.

Were they tough questions? Or was it pro forma?

Hall: I can't remember specific — no, they were trying to find out which
way you were going to bend. Salvatori, he had some difficult
questions, because they were loaded questions from both sides of
the spectrum. And apparently I passed at that stage.

At the conclusion, Holmes took me by the elbow and said, "I
want you to meet somebody who's very important to us." And this was
Charlie Cook. I did not know at that time who Charlie Cook was.
Charlie Cook is the chairman of the board of Community Bank of
Huntington Park. He is also chairman of the board of Challenge-Cook
Industries which makes, among other things, all the transit-mix
trucks. He is also chairman of the board of twenty other things.
Charlie Cook is the guy who put Holmes Tuttle in business. They
came out, Charlie and his brother and his mother, came out in 1922
from Oklahoma, after Charlie had been in the banking business where
he had been associated with several banks in Texas and Oklahoma.
They came out with their possessions on top of the car and started
out fresh. Their mother ran a laundry and Charlie went into the
banking business and his brother went into manufacturing, I guess,
or auto sales, probably auto sales. Tuttle was their bright young
salesman. And that is how it all started. And it is a fabulous
story. Charlie is still alive and kicking. I'll get to that later
because I'm afraid I'm not one of his favorite characters. Holmes
introduced me to Charlie. And Charlie wanted to chat briefly about
the banking business. Apparently that was a key discussion, which I
didn't realize. I thought all the important guys were in there, why
wasn't Charlie part of that group? Charlie has always kept himself
out of the limelight. He, I think, is basically a shy person, and
he doesn't feel comfortable with all those other people.

Biggart: Is he part of the kitchen cabinet?

Hall: No, not directly.

Biggart: I never hear his name mentioned in that respect.

Hall: That's because Tuttle is the guy, and Ed Mills, too, is also part

of that, and there are other people who are part of that same group.

Biggart: What was Cook's relationship with Reagan, was it through Tuttle?

Hall: Reagan knows who Cook is and it's a friendly relationship, but

Charlie always says, "If it is political then that's what Holmes does.
I don't understand those things," he says. Or he won't directly
get involved in it. Although he will — I think he has been a delegate
to Republican conventions from time to time. He is personally very
conservative, although he's got some very liberal political friends.
Senator from Oregon was a friend of the family. Charlie was certainly
key as far as the banking side of things.

Hall: Then, after that, I had to go through the routine of meeting the

bankers, California Bankers Association; they were up in arms 'cause
here's a thirty-three-year-old lawyer from San Diego who they'd
never heard of, who doesn't know anything about the banking
business, coming in as superintendent of banks. So I went — they
happened to be having a meeting with a California Bankers
President's Council in Monterey and there was an old — not so old,
but since deceased — vice chairman of the board of Wells Fargo (Stephen
Chase) who introduced me to everybody and kind of carried me around
the meeting. And then we got in the back room with about twenty
bankers around an oval table this time. I had already heard there
was an active telegram campaign trying to promote a banker (Aubrey
Austin) into the position rather than me and I knew what the governor's
position was and that was no problem. But we basically played twenty
questions; I got along all right and eventually established a very
good relationship with the banking community. Because they figured
I was reasonable, I was not bombastic, and I was generally pro
banking, and pro independent banking, and was not going to knuckle
under to the Bank of America or various other people.

There was almost immediately a controversy with the Bank of
America over a bill that they had been promoting for a long time,
which the governor eventually vetoed, and it was my recommendation
that he veto it. It was at that point that I got to know Lou Lundberg,
who is the chairman of the board of Bank of America, quite well.
He sure was mad.

Biggart: In this process, did you ever have an interview with the governor
about the job?

Hall: Pro forma, I think. We had met and there had been conversation — he
knew who I was. I think the key discussion was probably with Tom
Reed, I can recall, as they were getting ready for some inaugural
activity. I can't remember when exactly that was. But I did have
what I considered a real interview with Tom. The only time that
anybody was really sitting there saying well should we or shouldn't
we.

Biggart: Was this before the other interview?

•

Hall: It was before. It was shortly after the phone call from Tuttle, and
then, I think, I had to go immediately to Sacramento and talk to
Reed at that point.

Biggart: Reed was a member of two- or three-man screening committee?
Hall: I don't know.

Biggart: I think that's the case— who else was on it?
Hall: Was Bill Clark part of it?

Biggart: No. He and Weinberger were working on a study of priorities in
government. Battaglia, Reed, one other.

Hall: Well, anyway — as you know, Gillenwaters was selected as the Washington
contact for the governor, since he was familiar with that end of
the business, having been Bob Wilson's AA, and Gordon (Luce) was
selected as what became Business and Transportation secretary.

Biggart: So you were working for him then?

Hall: That's right. And I'm fairly sure that Gordon had some influence
on all this. I assume so, and always gave him credit or blame,
as the case may be. So I operated for two and a half years as
superintendent of the banks. My headquarters was in San Francisco,
so I didn't have a lot of direct relationship with the Sacramento
inner politics. Gordon and I would talk from time to time, and
I would have a feel more or less of his frustrations with the
governor's staff, but I didn't have that on a day-to-day basis.

Biggart: How did it feel to be separated from the bulk of the government
in Sacramento, is that a problem for you?

Hall: Not a bit. That is an advantage. I always felt they were very
wise to keep it that way. I struggled or I resisted having an
office in Sacramento. I preferred to come and go and not be pinned
down by the political side of things. We had an understanding
throughout the executive branch that the governor and his staff
were not going to have anything to say about bank charters or bank
branches, but if a problem occurred where somebody was getting a
raw deal, we would expect to hear from somebody. But on the
standard day-to-day stuff, we had total authority and we followed
the statutes. And that was clearly understood all the way around.
At least as far as the banking department. I'm pretty sure savings
and loan operated on the same basis, Pres Martin was there. And
we were able to resist — there really wasn't that much direct contact
from assemblymen or senators or certainly none from party people.
So you got to run your own show, and you fought your budget
battles, and since we were independently funded by the bankers,
there was no significant problem as far as funding.

Biggart: I didn't realize that.

Hall: Yes, it's a separate fund. So you're not going to the general fund for

bank regulation [funds]. It is
process and everybody pays.

a separate thing. There's an assessment

Biggart: So does that give the department a tradition of independence?

Hall: Well, independence to an extent from political pressure internally.
A lot of people including Carl Schmidt , who was the recent
superintendent of banks — I think their attitude is this makes you
beholden to the bankers who pay the bill. Well, I figure you have
to have intellectual independence whoever is paying the bill.
You've got to make your mind up on the facts and not worry about
necessarily (somebody's got to pay it, whether it comes from the
governor's budget or the director of finance or somebody else).
So that — I didn't worry about that. And we attempted to hold down
the costs and follow Reagan's cost savings programs, and do it
realistically so that we didn't simply wipe out bank regulation as
a demonstration of how you can shrink the government. Which is what
Jerry Brown is doing right now.

Today, I talked to Saul Perlis, who's now commissioner of
Savings and Loan; he used to be the general counsel for the Department
of Savings and Loan. And Saul said he had just gotten through with
the budget hearing, and they're essentially going to do away with
the examination process for savings and loans — for state-chartered
savings and loans. Just as a demonstration of how they can cut the
government. Well, this is known as cutting bone. This is not fat.
There may be some fringe programs there. But the number of state-
chartered banks were about eighty or eighty-five when I was
superintendent. There are now about a hundred and seven. And
they have to be examined. Because when you get that many institutions,
you start running out of competent people, there aren't enough
people to go around to run the banks. And your examiners, you have
to have more of them, and they have to be better. But Brown has
gone in a different direction, which is not wise, but that is the
way it goes. Anyway, I became imbued with the idea that I was an
independent appointee of the governor. He was the boss. The secretary
of Business and Transportation, who I liked and admired, was the
governor's representative as far as my chain of command. But I
figured that if anything ever happened where there was a disagreement,
I always had the right to go to the governor and explain my side
of the issue. There were very few situations where I had anything
of significant importance to report to the governor. Wells Fargo
converted from a state charter to a national charter in 1968, or
1967, shortly after I got there, and that was a blow to our pride
and it was not a wise move on the part of Wells Fargo in my opinion.
I think they've suffered ever since. The fact that they're just
the second or third national bank in California rather than being
the biggest of the state-chartered banks. They could have had more
clout, I think, could have done more things if they had stayed within
the state system. But that is a technical thing.

Hall: So I had committed to two years and by the middle of '69 I had

made a mark nationally, people had talked about me being considered
for comptroller of currency, we got a little bit of national
press and it was very impressive to me, if no one else.

I thought I was getting along fine, and I was getting restless
and trying to figure out when to go back to San Diego. The law
firm had indicated that they would keep the door open for two
years or so, if I wanted to come back, but after that, it was not
a sure thing. And they did extend an offer of a partnership to
come back. So during the fall of '69, 1 was essentially getting
ready to move out.

Backing up to June of '69, the president of San Diego Federal
Savings and Loan died. My father had been on the board there for
a long time. I heard about it immediately and I said, "Obviously
the guy who is executive vice-president will become president. My
father said, "No, when the number one guy died, certain things came
to light and we have decided we have to have new management." I
said, "Would you be interested in talking to Gordon?" Gordon had
been the vice-president for marketing and public relations for Home
(Federal) Savings and Loan in San Diego before he came to Sacramento.
And my father said, "Yes, that's a good idea." I talked to Gordon
and Gordon said, "Number two guy is going to be number one." I
said, "No, they are looking for somebody, and should I have them
contact you?" And he said yes, so eventually, in July, they made
a deal with Gordon. The first step in the deal was to move Jim
Schmidt into position of executive vice-president, immediately,
at San Diego Federal Savings and Loan. Jim had returned to San Diego
in January of '69, so Jim went over to San Diego Federal and started
getting things organized. Gordon had indicated to everybody that
he would stay through to a period during the fall and he let the
governor know, I understand. He had done the right thing, but he
went on for three, four, then six months before Gordon actually
stopped being secretary of Business and Transportation. So by the
time he got to San Diego Federal it was all organized and he could
just move right in; hell of a deal and I once more admired his
skill. But they had a terrible time in the fall of '69 finding a
successor for Gordon. Gillenwaters felt that he was the logical
successor, he put on a hell of a campaign, and he got every
politician he had ever heard of to write a letter and phone the
governor, or the governor's staff.

Biggart: What position was he in at that time?

He had come back, or he was in the process of moving around from
liaison man to another position. I think he was back in Sacramento,
or at least he was in process. And Ed (Gillenwaters) called me
and said are you interested in the job, and I said no, I'm not
interested in the job, and he said will you back me for it, and I
said sure, that was fine. And that was late November by the time
that conversation took place.

Luce had already left?

No, Gordon had announced his resignation, but I think they had made
it effective either at the end of November or the end of December.
(I think we better go off the record at this point.)

Meese called me and said we really want you to do this. We
haven't been able to find anybody else who's acceptable. This was
about the 23rd of December. And I think I didn't make up my mind
till New Year's. It was a real strain because here I had a
partnership offer outstanding to me which was exactly what I had
prepared for all my life — and here I have this other thing of
being a member of the governor's cabinet, which was very romantic.

When you made that decision, what were the factors that ran through
your mind? In terms of why, was it ideological, a sense of power,
that or an opportunity that shouldn't be missed?

Yes, that last point; this is probably the only chance you're
going to get to play at that level. And I felt that the governor's
advisors were not as strong in support of what I felt to be his
position as they ought to be. That was a factor and I had gotten
this through feedback from Gordon from time to time of who was
in what position in the cabinet and (I could tell) — I had already
started in my classical conflict with the Department of Finance.
I wouldn't put up with their jazz of holding hearings among
governor's appointees. As far as I was concerned, the departments
were co-equal. They were all part of the team and we're not going
to have a cop sitting around telling us what our programs are going
to be. I'm willing to make the financial deal and negotiate the
budget but it will be on the basis that we are all trying to
arrive at the same reasonable goal.

Was this Weinberger who was in then?

Well , Cap wa« a very good diplomat and he sensed that there was
this uneasiness. So he was easy to deal with. Because he was
competent and he is an excellent operator, and he knew what he was
doing. He didn't try to browbeat anybody. On the other hand, within

Hall: the second cabinet, the whole income tax thing had gone down the
chute. And that was one of the reasons I felt very strongly that
once you get into a withholding situation with state income tax,
there would be very little resistance. You know the governor's
story, that taxes should hurt. That's right. People, if they know
how much tax they are paying , they will be conscious of how it
is being used. And history has now demonstrated that. Our
property taxes didn't use to be very important to people. When
they got important, people took it into their own hands, and they
have created a situation now that nobody knows where it's all going
to end up. If we had gone in a moderate way toward some kind of
spending limitation, I think it would have been much better. But
now the Jarvis ax — it's going to be very tough.* So, 1 hope I
indicated to everybody on the cabinet that I was going to be
strongly supportive of the governor's positions, what I interpreted
them to be, regardless of all of their neat little arguments, when
we ought to be doing something else.

Biggart: Who are you referring to?

Hall: Well, I guess Cap for one, because he very logically figured that
the only way to do these things was to spend more money on these
programs and get more money over here with withholding. I felt
that some more radical solutions might be better. Shortly after I
came on, Vern Orr became director of Finance, and initially I think
we got along fine. Eventually, it got pretty bloody. It really
got bloody when in an unguarded moment he indicated that he felt
the whole course of history indicated that the power would flow
to Washington and centralized government, and why should we stand
in the way of history? And I've never forgotten that. I just heard
on the radio yesterday Reagan once again saying what is really his
feeling, and his true, hard-core feeling, that this is the worst
possible thing that could happen and that the power should be
flowing in the other direction. But to have the second most
powerful person in the state holding the opinion that it was
inevitable, that all the power would flow to Washington. This
just boggled my mind, and it still does.

One of the reasons that I did not participate in Ronald
Reagan's presidential campaign was that the only guy who ever called
me was Vern Orr. He called early in the summer of '75. He said
we're putting together some money and trying to raise some money for

*The Jarvis-Gann Initiative, 1978, severely limited revenues to
local governments; popularly known as Proposition 13.

the governor to run for president. And I thought it was so ironic,
that it would be Orr calling me, that I sat down and wrote a letter
to the governor advising him not to run in the method he was doing,
but instead to become the leader of the conservative movement in
this country, to go out and raise money for conservative politicians,
whether they're Democrats or Republicans. And then if all that body
of opinion backed him, he would be nominated president and win the
election. But running for it in the traditional way was not going
to do it. I was right, and they became more and more traditional
as they got into that campaign and they drove the final nail with
Senator Schweiker. And that ruined Ronald Reagan's credibility
forever. I believe that he is going to be very embarrassed in this
next round of the primary. Because Phil Crane is very believable.
Phil has been consistent and intellectually honest and that is what
people are looking for. Now I am not going to support Phil Crane
either, because he doesn't have broad appeal... but there, these
things — I don't believe in amorphous, making little deals because
somebody's either going to be offended or have greater appeal, and
all this stuff. That is the reason people are turned off on
politicians.

Which in your position, do you feel the pressure to be political
in terms of decisions being made?

I'm a bit of an idealist. I kind of figure if you're intellectually
honest, and if you are practical, and if you figure out the
efficient way to do something, and if you set your goals properly,
people will catch on after a while, and that is the political
thing to do. So if you do the right thing, people eventually, if
your PR is good enough, they'll find out about it and support you.
So I was initially plunged into this thing as the youngest member
of the cabinet and nobody knew who I was. Because I'd been out of
town. I'd met all of these people, we'd gone to events together,
but they never worked with me and I'd never worked with them.

We had some controversy — Reinecke was lieutenant governor.
They had assigned him to do environmental things, computer studies
and various other things. I had the highway patrol. In the
computer field, they wanted to consolidate all of the computers.
Somebody said this is the thing to do. I said I don't care what
you do, but I want the response time, when a cop is standing behind
a car and wants to know whether — and there's a guy with a shot gun
in there and going to blow his head off, I want a fast answer. If
you can guarantee that, I don't care how you do it. We got it
now and we're not going to give it up. I drew a line. Well, Earl
Coke was the secretary of Agriculture and Services, and Earl had
been through bureaucracy all his life, he'd grown up in the Bank of
America, he'd been off in Washington. I had already (through gossip

Hall: and other things) characterized Earl as a pretty good bureaucrat.

And he proved it time and time again. He was also a good in-fighter.
He knew exactly what buttons to push and when to push them. I guess
I really ripped it with him when we had struggled to get Reinecke
to do something, and Ed was not an effective organizer — he was a
politician, a good guy. But in terms of executive planning and
action, it just never jelled.

And we had a lot of controversial stuff in the environmental
field. Of course, I was on the transportation side and was willing
to deal, but there had to be some compromise position between me
and Ike Livermore of Resources, Ike being a very strong environmentalist
and a guy I truly love. He was a very lovable guy. And probably
the most effective of all of us when you get down to it, 'cause his
programs are now in place. The rest of our programs are pretty
fragmented. So he was a big winner. In all of these discussions,
we finally got Ed as chairman of this committee, to agree to a
certain position, and we all voted in that committee that when we
got to the governor and the cabinet, this would be the deal.

Biggart: Did you frequently do that?

Hall: Only when we had difficulty. This was a very difficult situation
because it involved a lot of compromises, and I can't remember
exactly what it was but it was some environmental-quality thing.
So we actually polled the group, said okay, we agree on this and
this is the way it's going to be, and we'll go make the presentation
to the governor and we'll hear all this and —

Biggart: Who was there? The four cabinet agency heads?

Hall: Well, I know Coke was and I'm pretty sure Ike was. Reinecke and
staff members. Pretty sure Meese or somebody representing them.
We got to the cabinet meeting and Earl wanted to argue some more.
So I called him on it and said, "Governor, I thought we had all
this settled and it now appears that one of our members has decided
to change his vote. And I think we're now going to have to go back
and try to get it done." Well, Earl was absolutely livid and
sputtering, and I think from that time forward he completely
concurred and thought that I was an arrogant, rambunctious young
man (which I am), but he really, at that point, felt that I had
embarrassed him in front of the governor.

Biggart: I'm interested that you would — meet before the cabinet meetings to
consolidate the positions. Supposedly the cabinet meetings were the
forum for debate.

They were and they weren't. I got along fine with Ike and got along
reasonably well with Lucian Vandegrif t , who had come in after
Spencer Williams. We went into the summer and it was appearing that
the whole welfare thing (this was the summer of '70), the welfare
thing was totally out of control. We had gone through various staff
meetings, trying to figure out what was going on, we had actually
approved certain programs and then they blew up in our faces. We
realized that we were getting strange input. I think Meese was —
I don't know who originated the idea, it was probably Ed, who said
to the governor, we've got to have a task force. Not intentionally
sabotage, but something is wrong. The August fourth memorandum was
issued and the governor (a very rare circumstance) , he took control
of a meeting and said (he had some charts and explained all the
charts to us), and said here is what we're going to do and issued
the order. And the order essentially was that there would be a
task force on welfare and there would be a task force on education,
because both were very serious problems. Tom McMurray had a great
deal to do with the staff work, which backed up the memorandum, 'cause
he was working as a junior staff member under Meese and whoever
the programs guy was at that time.

You said there were few cases where Reagan took control of a meeting.
I assume it was Ed Meese who generally ran the meetings?

Crumpacker was cabinet secretary, and Meese was the executive
secretary, I'll get to the relationships as far as the governor's
staff and the cabinet. Then there is a great division between those
areas — but he did it two or three times but it was on rare
occasions where he would say okay, now it's my meeting and everybody
pay attention. Most of the time there was an agenda that was
followed, there would have been a circulation of data ahead of time,
each item would be considered in order, if something was out of
order, it was because it was important to deal with it right then.
There would be general discussion, there would be an indication of
disagreement or agreement by various people around the table. The
staff that was behind us all the time — you'd hear this voice over
your shoulder, Steffes saying, "Governor, that's not quite the way
I see it." And he'd be shooting down one of your favorite programs.

The governor then obviously allowed —

Sure, and encouraged it. He made a comment one time, he said, "You'd
think everything was going along all right, and we see Hall shaking
his head." The August fourth memorandum came out with two subjects,
welfare and education. We had been equally concerned about the

Hall: education side as the welfare side. Welfare was clearly defined.
You knew what the playing field was there. No way to define the
educational problem. Except the numbers were all going up. It
seemed like a growth industry which was draining more and more of
our substance. The unfortunate thing that happened was that we
concentrated all of our resources on the welfare thing.

We gave the education side — or somebody maneuvered it so
that all of the education side was run essentially by the Department
of Finance and Jim Dwight. And they had their own little task force.
And it went off and did the usual bureaucratic job on education,
so nothing happened. We all were asked to donate personnel to the
welfare task force and 1 picked Bob Carleson, who was deputy
director of Public Works at that time. I had to overcome serious
objection from Jim Moe who was the director of Public Works. Cause
Jim was really depending on Bob for all of his local government
relationships. He was a good administrator but he hadn't any kind
of experience in dealing with local government the way Bob had. So
I got Bob, and Bob recruited Ron Zumbrun from the legal division
of Public Works and two or three other guys who were administrative
assistants in Public Works. Jack Svahn and Carl Williams, that was
our contribution, essentially out of Business and Transportation.
Jerry Fielder, who was the director of Agriculture, was contributed
by Coke, and there were two or three guys who were key actors. The
head of the welfare task force was Ned Hutchison, who at that time
was appointments secretary.

I kept getting feedback from Carleson all the time. First of
all, they said it's a gold mine. There are lots of things that can
be done immediately just by administrative change, and we've got
the power to do it, there's no sweat. I also began to get negative
feedback that there was not sufficient leadership being exhibited
on the task force and that they were running into resistance from
Vandegrift and the Human Relations Agency. Not real resistance,
but just bureaucratic resistance. Bob Martin was then the director
of Social Welfare. Jeff Davis was somewhere — I don't know if he
was in the governor's staff or he was in the Social Welfare staff
at that point. So by mid-fall the situation was coalescing, and
somebody reached the conclusion that Vandegrift had to go. I'm
not quite sure how that was reached. But they figured that he would
make an excellent superior court judge and he does, he runs a heck
of a good court up north and so that was arranged with Vandegrift.

They approached me and said, "Will 'you do the Human Relations
job?" And, of course, I said yes. Once again duty called. I didn't
recognize what a fat good thing I had in Business and Transportation.

Should have stuck around there a .little longer. But I said fine,
is it okay if we make Carleson director of Social Welfare? That
was agreed to. I asked Ed to arrange for he and the governor to
talk directly to Bob to give him a little pep talk. Apparently Bob's
response was sure, I'll do it if Hall was secretary.' So there was
a mutual team thing 'cause Carleson was a very aggressive, alert,
politically savvy, administrative savvy person. He'd been the
city manager in small cities and knew how to handle committees and
things like that.

We had a meeting at the Sutter Club sometime shortly before —
well, we had a meeting in Santa Barbara either late November or
early December of '70 where these things were made public to the
staff and the cabinet. And then we had a planning meeting of some
sort shortly before Christmas. I can remember walking out of the
Sutter Club with Earl Coke; Ned had made his report on the welfare
task force, and we'd all received some material. And I had
requested, as the incoming secretary, that all of the report be
put in writing and delivered by New Years. And Ned had said, well,
yes, and Coke and I were walking down the street, and Earl said,
"You're never going to see that report." I said, "No, I think I
am ."because I knew who was going to do the staff work and that was
Tom McMurray. And Tom spent night and day from that point until
that report was written. And he essentially wrote it. He gathered
all of the input from the task force and put it down in writing.
And that was the beginning of the welfare reform. As soon as we
had the report we essentially sat down to write the program. And
we spent night and day at blackboards putting down words and testing
them, testing principles, goals and we came up with the goals by
early January sometime. We got those cleared and we took it step
by step. I guess the first pressure point was that I wanted — I had
set a short deadline. They didn't want to have that much pressure
on them. I can't remember exactly what the staging was now, but
there used to be a governor's message and the governor's staff,
Steffes and Meese in particular, Jim Jenkins I guess was out as
press secretary by that time. Jenkins was and Ed Gray was number
two. Because Ed did a great deal of the editorial work on the
stuff that we were putting together. So we finally wrote with great
strain, and there was some thrashing around, and wrote the message
which was delivered March fourth. Well, in between there had been
an awful lot of backing and filling and lots of other things, and
negotiating with our side, getting Clair Burgener to be author, and
I think we drafted the legislation during that period. Most of the
technical work was done by Zumbrun, Carleson and Svahn and Chuck
Hobbs.

The original members of the task force?

Hall: Well, Hobbs had been a deputy in Social Welfare. He was the only
guy that stayed. Everybody else was moved out, and it was a whole
new operation. Bob was fighting off the animals over there, 'cause
it was a very restless crew. The difficulties were a story in
itself. So then we went on the road in March, April and May, around
the state to the press, and we had a little dog and pony show and
the governor would make his presentation.

Earl Brian had a program that we allowed him to pretty much
run on his own, which was another mistake. Nobody knew what was
happening. That was an error of my making 'cause I thought Earl
knew what he was doing and I thought he was straightforward and I
thought he was a lot of things which turned out not to be so. By
June, early July, we all went up to Jackson Hole to the Western
Governor's Conference where we put on a presentation. And there was
substantial friction by that time because I felt that people were
taking authority over the program away from me.* It was going in
the hands of Meese and Steffes primarily. Where I was never sure
that if I said, "Do something," whether that was going to be
followed through or not, in my own organization and the departments
under me.

Biggart: What — how did they get involved in that?

Hall: They were constantly involved. First of all, it was a crucial part

in the governor's program. Ed was very involved all the way through.
Steffes, Jenkins were deeply involved, in the drafting of the
programs and in carrying it out. I essentially controlled the
resources, but this was for the direct use of the governor in all
respects, it was a major effort and they were directly involved.
Ed Gray under Jenkins was — I think he was under Jenkins at that
time. Ed was doing a great deal of the editorial work and writing
of the governor ' s message, 'cause that's what they did. It's their
work. We were providing them with the basic drafts and then they
would work them into language that they felt was useful. By that
trip to Jackson Hole I was very unhappy with my authority over the
program being sidestepped. And Meese and the governor and I talked
about it. And everybody said oh, no, no, no, you're still in charge
of the program.

Well, shortly after that, the direct negotiations with Moretti
and the Democrats started. It was pretty clear to me that there
were too many players. There was Steffes who was legislative, there
was Meese who was essentially the governor's right hand, there was
the governor personally, there was Carleson as the director of

*See memo to Governor Reagan, July 9, 1971 — "Welfare Reform
Responsibilities." In appendix.

Hall: Social Welfare, there was Brian as the director of Health Care
Services, and there was Zumbrun as Carleson 's lawyer, as the
principal draftsman. So I looked around the room one day and
said , "There was no reason why I should sit through every one of
these sessions." So I volunteered out of the thing. Now this was
a recognition that I wasn't going to have anything to say anyway,
cause there were simply too many technicians and too many policy
guys for me to really play a role in the direct negotiations.
But behind the scenes , Carleson and I would have dinner practically
every night. We would be in constant communication, and it was
necessary for me to intervene with Meese and Steffes on a regular
basis, not to allow them to give away too much of the program in an
attempt to show what a reasonable person Ronald Reagan was in
dealing with the subject matter with Moretti and the other side.
And the other side, by the way, included Bill Bagley and some
Republicans. It damned near came to blows on one occasion because
Steffes was leaning very unreasonbly on something and on Carleson.

Biggart: Why?

Hall: There was some point that he wanted to concede, and they were

saying no, if you do that, these are all the things that are going
to happen, and you can't let that happen. And he would say, "Goddamn
it, this is the way it is going to be." And I finally turned to
Meese in that particular confrontation and said. "Get this guy off
the back of my people right now." It was an extremely tense and
heated exchange.

Biggart: How did Meese respond?

Hall: Quietly, which he usually did. Ed in those types of situations
was quite good.

Biggart: Did these confrontations ever come to the attention of the governor?

Hall: I don't know.

Biggart: If they did, it would have only been through Meese?

Hall: Or Steffes or myself 'cause both Ed and Steffes had immediate access,
as did Deaver, but Deaver at that time was a coordinator, he was
not really that much policy. But from a policy standpoint, George
was constantly there with the governor on bills and legislative
things and everything else, political whatever — and Meese was
there to try to act as the executive as he should have. I always
felt he carried out his role well and probably as well as you could
ask for but there were some occasions where I felt that there was
not full disclosure, and there was some devious activity.

Biggart: On who's behalf?

Hall: On Ed's. ''Cause he wanted it to come out right and he didn't want
to tell you how he was maneuvering the situation.

Biggart: Do you think he was doing that to protect the governor?
Hall: Oh, yes, sure.

His concept of what the governor ought to be doing. Now his
concept and my concept very often were not coincident. Because I
think I respond to the governor's basic urges. Now a lot of people
think that is foolish, that is radical, that's right wing, that's
impolitic, we're going to hurt somebody or we're not going to be
able to get our bill through, or the governor's veto is going to be
overridden. Which was a big deal for those guys and I always felt,
what the hell? Stand up for principle. If the Democrats and the
wayward Republicans in the legislature want to override a veto, so
be it . And he can go around and make an issue out of it . But
there was a fundamental principle that he would go without having
a veto overridden. And they conceded a great deal because of that.

Biggart: Was it an understood principle?

Hall: It was an expressed principle. So there was an awful lot of

negotiation going on. And I... you know how a lobbyist goes to the
other side, and the other side says, why don't you guys be reasonable?
And they convince the lobbyist that his boss is being unreasonable.
So the lobbyist comes back and convinces everybody that they're
being unreasonable and that they really ought to compromise and if
they compromised then everybody would be happy and then we'd get a
vote on this, that and the other thing, and everything would be
fine. And it's pure negotiating technique. I, more or less on the
sidelines of the legislative representation thing, always felt that we
were giving away too much. That we were not being tough enough.
And it really got very sticky during the negotiations on welfare
reform. Because I was talking to Zumbrun and Carleson, and I said,
we're losing points every day that we stay in it. So we had one
really serious confrontation but a lot of little ones during the
period in July, and then the bill was finally passed and signed in
early August of '71 and within the next four or five days, George
Jackson tried to get over the wall at San Quentin and there were
five guards piled up in a cell, down there, and I put on my prison
hat for the next four or five months. I think we did an adequate
job and we... the prison situation, although we never really got
anything accomplished. It was a holding action trying to find out
what was going on.

Hall: And then somewhere along the late fall, Taft Schreiber and I saw

each other at some gathering and Taft said, "Why don't you come to
work for MCA?" I said, "What's MCA?" And we went back to Washington
in January or February when the governor was testifying on welfare
and the Family Assistance program — the Nixon program. And we had
been battling with HEW, Richardson and everybody, lots of fun — most
of his work was being done by Carleson. It was during that trip
that I told the governor that I thought I'd go to work for MCA, and
he said, "If you think that is right, but I wish you'd stick around be
cause maybe you'd get a better job later." He didn't tell me all
of his experience with MCA and he didn't tell me that I might be
signing up with the wrong team at MCA. Lew Wasserman, who was the
chairman of the MCA board, was Reagan's agent for a long time. And
then Schreiber was Reagan's agent. But Reagan was Lew Wasserman 's
first million dollar contract. And the problem with MCA was that
Wasserman and Schreiber had always been competing with each other
over the years, and Wasserman always won and Schreiber always lost;
I didn't know that. So Taft has since died.

Anyway, let me tell you quickly about the staff -cabinet
relationship. When I was a department director, I was on my own,
I knew what I wanted to do, call my own shots. I could set meetings
when I wanted to have meetings, and I controlled my own calendar to
a great extent. As soon as I became a cabinet secretary, I had
to go to two cabinet meetings a week and prepare for each one by
reading a lot of stuff that I had never heard of but was supposed
to have an opinion on. And that was twice a week for at least an
hour and a half. So you suddenly instead of looking out at your
constituency or your area of responsibility, you're looking inward
at the governor and the governor's staff relationships and appointments
and things like that. So there was a great time pressure, for one
thing. You felt constrained in your activities. Secondly, you
became much more aware of the difference between a cabinet
secretary and the governor's personal staff. They always figured
they were always closer to the governor than you were. And that was
true. 'Cause they were right there in the suite and they would see
each other every morning and all that. We might be out across the
street or someplace else and when we were in the office, we were
in somebody else's office. The physical geography was very
important. From time to time, we discussed moving the cabinet
secretary to the governor's suite. And then for money and other
reasons, that was never done. But it was very truly a factor in
the geography of location. The immediacy of contact was fundamental.
I think Ed Meese is mechanically very good. On a philosophical basis,
he overemphasized some things and underemphasized others. I think
politically he is basically a moderate, although he comes off in
the press and every place else as a very conservative person. I think

Hall: there are a number of things as far as the regulation of business
in free enterprise aspects that I would find myself in some
disagreement with, at least at that time. But obviously, on the
law enforcement, he's very strong law-enforcement, where I might
bend a little because of individual freedom being more important
to me than some rule of the police force. But basically I think Ed
did a good job. And the staff did a good job. It was a good
staff. But there was constant friction between the secretaries'
offices and the governor's office.

Biggart: What kind of —

Hall: Demands for quick response and information coming to the

secretary's office. You always felt you were in the second tier,
even though you were supposedly a deputy governor, it never quite
worked that way. And supposedly you were exercising the governor's
authority in your area of responsibility, but it always seemed to
me that you were subject to being overruled immediately by at
least Meese and maybe by the press secretary and maybe by somebody
else.

Biggart: Did you get this feeling from the governor as well?

Hall: No. Because I think the governor's sense was that the people

around that table were equal. There was one other instance which
created a problem. This was part of the problem, believing
everything that Earl Brian was promoting. Earl being the only MD
on the cabinet or in the administration. Insinuating himself into
the governor's medical questions. I don't know whether this is
because Nancy's father is a surgeon, or whatever, but there was
some medical practice going on between Earl and the governor.
It didn't bother me at the time, but I think in retrospect this was
the wrong thing on both sides.

But Earl had a theory about taxes, sales taxes and how we
could save money if we would only change some things, and he had
tried to convince Vern Orr that this was the right thing to do and
Vern either didn't give him an audience or else Earl was playing a
different game. Earl convinced me that he should have a direct
audience with the governor on the subject, which had something to
do with sales tax and how the governor was being led down the
primrose path by the Department of Finance, and if he kept doing
what he was doing there was going to have to be a heavy tax increase
and that really was not necessary because there was a surplus, etc.,
etc. Earl was a brilliant thinker, Earl Brian. So he convinced me
that he had at least a message; whether I understood it or not,
fully, or endorsed it, I felt that he had a right to make a presentatioi

Hall: to the governor. I can't remember exactly how it all went together,
but we ended up in the basement room of the governor's house. And
the governor, Earl Brian, Vern Orr and I (and I don't know whether
Meese was there on this occasion) and Earl went through his
presentation, and Vern attempted to rebut it but really couldn't
very well , and it was obviously a very unhappy situation as far as
Vern Orr was concerned. I didn't feel that we were doing anything
that represented a personal attack on Vern. I think he did. I
think he took it very personally and felt that we were really trying
to destroy him, and that I was in league with Brian and perhaps
was pulling the strings to get Brian to do that. So it was not a
very intelligent thing for me to become associated with. But I
did it on the principle of department directors, which I had once
been, should have a right, if they feel strongly about something,
to make a presentation to the governor. And if it is potentially
embarrassing to somebody else in the governor's organization, then
it should be a small group, where embarrassment is minimized, at
least.

Biggart: I understand that after the re-election that Tom Reed and several

of the other people that had been active in the governor's campaign,
were unhappy with some of the personal staff and sat down and
actually wrote up a list of people that they wanted to submit to
the governor they thought should be removed and new blood should
come in, including Meese and Deaver and I guess a number of other
people on the staff.

Hall: Was my name on it? I never heard. I think that is right. There
was unhappiness and I have forgotten why that is. I really can't
remember. It was just a buildup of unhappiness over policy and the
way the governor was being handled — things like that.

Biggart: I think that whole difference between the staff and political...
continued. . .what was the source of that friction between Tom Reed
and Meese?

Hall: I don't know. It must have been the way the governor was handled
during the campaign. Meese attempting to protect him from the
pressures of campaigning or telling him that he still had to be
governor while he was running for office, I suspect that was it. It
was probably scheduling or some such. I suspect that Gordon Luce will
have greater insights. I think people got the sense that maybe
Ed Meese was running the thing and wasn't doing what the governor
really wanted. 'Cause I used to have that sensation too. I would
hear one thing from the governor and I'd hear something fuzzy from
Meese, and I think I can judge when the governor's talking and when
Ed Meese was talking. They did not coincide. I think there was a

Hall: protective shield around — the campaign group probably thought that
the governor was being shielded too closely. Now you know, none of
of us were permitted to take part in the campaign. (Some people
left to take part.) But anybody who was still on the state payroll
was ordered not to make any financial contributions, not to raise
any money and not to make political appearances or speeches.
I took that seriously and I think most other people did too. But
we were simply out of politics. I think it was a disastrous policy.
It just doesn't make any sense in American politics to operate the
senior governmental staff that way. It may look good in the civic
books but it is absolutely ridiculous and it destroyed the Republican
party in California. True statement.

Biggart: Why do you say that?

Hall: What have we had since then? They dragooned Gordon Luce into being
state chairman during that period of time, then they didn't
communicate with him or give him any power to do anything. It is...
then the successor to Luce was Haerle. And it was not a successful
tour for him, because Paul is not a diplomat and he doesn't know
when to 'keep his mouth shut. Then the successor to Haerle was Mike
Montgomery who is even a bigger disaster and we just have driven
people out of the party by presenting them with these leaders.

Biggart: Are you saying Reagan was too apolitical?

Hall: I think Meese guided him into that path and I think this may be what
caused Steffes...! don't know where Steffes was, on which side of
that particular cabal he was operating. I think George and I, if
we could ever settle down and get emotionalism out of the way, I
think we could have, probably from a philosophical and practical
standpoint, could have gotten along fine. But George is basically
paranoid and basically arrogant and the combination is deadly,
because we couldn't communicate.

Biggart: What did this tenure in government do to your personal career?
And how did it impact your personal life?

Hall: It wrecked a lot of things. This may be and it was probably my own
immaturity that brought my first marriage to an end. There were
comments from the other side of that discussion that it was going
to end anyway, so even if I had stayed in San Diego and practiced
law it was probably, except for social pressure, not going to hang
together, and when we got off in another atmosphere where there was
no social or family pressure to keep it together, it flew apart.
From a financial or practice standpoint, of course, I might have
gone back into the practice of law in '72, but I didn't, took an offer

Hall: in a corporate situation, which was naive, so it ended up that I
was out of legal practice for ten years. And then I
came back into practice last spring and so I'm putting things back
together. And it, from an economic standpoint, was disastrous.

On the other hand, there have been experiences that could not
be duplicated. I have never — well, I've never had any ambition
to run for public office. Unless you have some ambition like that
it's probably not a good idea to get into public service. Because
if you try to be a faceless, subservient public servant, you will
end up faceless and subservient, and probably will not be very
effective. 'Cause most people — and the public expect it. People
who are in public service are politicians. And I am characterized
by everybody I run into as a politician. And I don't particularly
like the characterization. But that, they always figure you're
one of these funny people who likes that kind of thing. That sets
you apart and is not necessarily an admired part of society. But
you do it anyway 'cause you like it.

Biggart: Were those good years in retrospect?

Hall: When I was superintendent of banks, yes. Cause I could call my own
shots and run my own show. The cabinet situation was a period of
conflict and high tension and disagreement. It was a period of
accomplishment, because I know for certain that the welfare
reform thing would never have occurred but for my participation.
It wouldn't have occurred unless there were other people participating
and I know that I was a key participant.

Biggart: Who were your allies on that, in terms of the cabinet?

Hall: Well, I think — Ed was definitely an ally cause he recognized the
importance of the issue. Coke and Livermore were passive and I
represented the other two votes essentially, because Van Camp had
been my assistant and he came as secretary of Business and
Transportation, and I recruited Frank Walton and he was strongly
supportive. I say I recruited him, he had been solicited for the
position and then they goofed around for four months, they didn't
tell him yes, no, maybe, sure, and I finally sat him down and said
look, if you're going to do this thing, you're the right guy for
the job, hang in there and we'll get it done. But I don't know what
was going on but they just let him drift for a long period of time
after they had essentially said he was going to be the guy and
close the deal, and he was ready to say to hell with you guys, you
don't know what you're doing. Frank was strongly supportive. And
Orr was sceptical and resistive.

Biggart: What were the sources of his resistance?

Hall: The close relationship between the legislative analyst, Alan Post's
office, and the Department of Finance staff. They're constantly
exchanging information and they're partisans, certainly on the
legislative analyst staff because we had them pegged and we knew
who the guys were and we knew who they were talking to on the
Willie Brown staff and other places. We had our pipelines and we
knew what was going on. Every once in a while, they would slip.
They would be sitting around a bar and they'd say something and our
guys would scurry out the door and change some language or protect
against a legislative language change. It was really cloak and
dagger work.

Biggart: Was Orr not able to control?

Hall: Well, when you're in a position like this, you have to hold onto
something and believe in it, and he believed in his staff, and he
believed in what he was doing. So I don't —

II PERSONAL BACKGROUND, 1940s-1966
[Interview 2: September 19, 1984] ##

Morris: Well, my mission is to reconstruct Reagan's gubernatorial administration
in the words of the key participants. In spite of your own evaluaton
of what you did, looking at a chronological list of the spots you
filled, the image that came to my mind is a baseball one, of
utility infielder, serving where needed.

Hall: Yes, more or less.

Morris: From a historian's point of view, we're interested in why things

happened, and the interaction of the people involved. How people's
philosophies developed, and then how they carried out their ideas
as well as Mr. Reagan's. The meeting of minds or the not-meeting
of minds. You seem to have been around in several celebrated non-
meetings of minds. [laughter]

Hall: Well, I don't know about that. We'll get into that, I guess, either
in this chapter or in another chapter.

Morris: Working from the interview you did with Gary Hamilton —

Hall: I'm surprised how spotty that is. I have not had time to go back
to try to edit it and figure out what the thoughts were. There
are so many gaps in it.

Morris: Part of that is the transcript. Gary did his own transcribing in

order to get data for his book.* Our mission is — if you will accept
it — is —

Hall: — is preservation.

*Governor Reagan, Governor Brown, Gary G. Hamilton and Nicole
Biggart, Columbia University Press, New York, 1984.

Morris: — is preservation. He has loaned us the tape. My proposal would
be to consider that interview the introductory chapter to the
conversations that you and I will have.

Hall: Sure. There are a lot of things in there that I shouldn't have said,
and I want to try to protect myself in some way. Not necessarily
from history, but I don't want a whole lot of things spread around
particularly. I would say the same things to the people to whom I'm
addressing the comments, so I have no reticence as far as that's
concerned. I think I am carefree enough to let the chips fall
where they may. Truth is a defense, so I don't have much problem with
that.

Morris: As you remember, he interviewed probably forty people, half of them
Mr. Reagan's administration and half in Jerry Brown's administration.
It deals with sociological constructs such as authority and
responsibility .

Power division and all that kind of thing. Group behaviors. I know
a lot about that.

And he has some interesting things to say about the two groups of
people, and how they contrast and compare, and how governmental
entities work.

He must have interviewed Silberman and some of those guys.
Yes. And Gray Davis and Carlotta Mellon.
Did he interview Lynn Schenk?

We were interested primarily in the Reagan administration, so he
didn't share with us as fully what he'd done with the Jerry Brown
administration as he did with your administration. We've incorporated
some of his ideas into our research. Questions of the very
interesting relationships, which I'd like you to talk about a little
more, of an agency secretary who has a constituency of the departments
that may not be the same as the governor's constituency. And that
produces some differences in direction, which have to be worked on
or not worked on, and perhaps do influence how things are carried out.

Hall: What is your professional background?

Morris: My professional background is a journeyman generalist — economics and
English, and fifteen years of experience in federal government and
non-profit agencies.

Hall:
Morris:

Hall:
Morris:
Hall:
Morris:

Hall: What part of the federal government?

Morris: I was a civilian employee of the U.S. Air Force, filling the
historian slot of a base in Britain after World War II.

Hall: You ought to talk to Tom Hamilton sometime. Tom was on the Navy

mobile staff that planned all of the invasions. In southern France,
and then D-Day , and then Okinawa. They were all over the world.
They had two or three admirals blow their brains out because of the
pressure, and all the rest of it. Tom was the staff secretary for
this thing. He was the guy who moved all the paper. He's got lots
of tales about buzz bombs, and Eisenhower, and all that.

Navy Staff Work; Law School; MCA, Inc.

Morris: Did you serve in the Navy?

Hall: Yes. I went to OCS in Newport, got out in '56, and then served
most of the time in Japan, in Iwakuni, Japan on a fleet airwing
staff. We ran patrol squadrons, basically.

This was my first introduction to staff work, which was very
important as a basic foundation for everything that came later.
When I went on board the staff, we were shore-based in Iwakuni. My
first billet — I was an ensign — I took over a commander's slot as
the staff administrative officer. Now, they didn't just hand this
over to me; I had a senior chief petty officer who was the true boss
of the administrative section. But I took over a commander's slot.

Morris: Is the senior petty officer role similar to the senior civil servant
in state — ?

Hall: Yes, basically. It's the same thing. You get officers rotating
through on anywhere from an eighteen-month to a thirty-six month
tour. And somebody's got to run the place. The petty officers
obviously also rotate, but they have a network because they've been
in for twenty years or so. They've got a network of people that
they know and experience and all that stuff that really makes it all
happen. The officer corps to some extent is like the political
corps, the political appointees.

Morris: Was it the experience in the staff work that led you to go to law
school, or had you been planning to do that anyhow?

Hall: No. What led me to go to law school was the fact that the family

corporation, the M. Hall Company in San Diego, was dissolved. This
came about because of tax and business reasons. So all the property
was distributed to the various members of the family, the shareholders.

I had always expected that I would go back into that business
and follow in my father's footsteps. He said, "Well, maybe you
ought to go to law school." And since I had nothing else to do at
the time, that was the decision. It was the natural thing to do.

Morris: Had your father had legal training?

Hall: No, he didn't graduate from college. But he had paid enough lawyers
over the years, I guess, to figure that that was probably a good
place to be. I can remember his early advice about becoming a
personal secretary to an important man as being a good way to learn
about business and things like that.

Morris: He was recommending this to you.

Hall: Yes. That's kind of an old-fashioned idea, but later on when 1 met
Ed Ball, who was the trustee of the Alfred I. Du Pont estate, it
all came into focus, because that's exactly what Ball had done. I
don't mean to bore you with a lot of strange coincidences, but Ed
Ball''s sister, Jessie Ball, was a schoolteacher in San Diego, in
grammar school in the early 1900s; and she was one of my father's
teachers. And he had told me, just in passing, in some conversation,
about this lady who had moved back east and married a very wealthy
man. Well, Jessie Ball married Alfred I. Du Pont. And Jessie Ball's
brother, Ed, was out here. He was a traveling salesman, and he sold
law books and rode the trains and got off from time to time and sold
law books. He finally got off in Los Angeles, and was the senior
salesman for Barker Brothers until about 1920. At that time, Alfred
I. Du Pont had gotten into his conflict with the rest of the Du Pont
family and moved to Florida. Somehow Ed was called by his sister and
his brother-in-law to come back and help manage. He essentially
became the manager of Mr. Du Font's business, and started buying
real estate, speculating in real estate, and all the rest of that.

And eventually Alfred Du Pont died in the late twenties, early
thirties with a vast estate, which continued to increase in value.
Jessia was the heir, and Ed Ball was the manager, basically.*

*See "But His Soul Goes Marching On," B. Stanro, Forbes, June 3, 1985.

Hall:

Morris:
Hall:

Morris:

Hall:

The reason that I know all this — when I went to MCA, one of the
first assignments that I had was to go to negotiate with Ed Ball to
•acquire the National Park concession at Mt. Vernon, which he had
purchased in 1928 or '29 as the sole bidder. The reason that he
purchased it is that the Balls trace their heritage back to Martha
Ball Washington. If you ever saw a picture of Martha Washington,
you'd also see a picture of Ed Ball, because they look just like
each other. Anyway, I have lots of fond memories of drinking with
Ed Ball, who at that time was eighty-six or eighty-seven years old.
Watching his style and his cleverness and all the rest of it. We
negotiated the deal, which was very much to his benefit.

Then in the process of meeting him in Tallahassee at his
plantation there, he had a picture on the wall. I knew that he had
an affinity and a liking for Ballynahinch in Ireland. They all had
a share of that fishing lodge. He wore the symbols and had a picture
of the lodge on his wall in his office at the bank. At the fishing
lodge he had a picture on the wall of a gray-haired man with a string
of salmon and an Irish gillie — a photograph, a black-and-white
photograph. He said, "That's the greatest fisherman at Ballynahinch."
We went on about it and somehow I asked, "Who is that guy?" He said,
"That man's name is Edward Hall." And it turned out to be my father's
cousin.

Who was the greatest fisherman —

— at Ballynahinch, who after World War I had established a brush
manufacturing company in France, had lived in Paris until the war
started. He turned over the company to his employees and left the
country and cooperated with the OSS during the war and helped in
intelligence work. And then had gone back to Paris after the war and
the employees had maintained a separate set of books. They just went
on together. So Ed Hall of Paris was how he was always referred
to in our family. I had never met him; he had only rarely come
into San Diego. And eventually it was Ed Ball who was the first to
know that Ed Hall of Paris had died. So it's a strange set of
circumstances. Small world.

So when you went to law school, you were thinking of legal training
as an adjunct to a business career rather than government?

Oh, there was no thought of government,
other than generalized interest.

I had no interest in politics,

Morris: Did you meet Ed Meese at Boalt?

Hall: No. I spent the first year at Hastings and ended up number two in
the class. At that point I decided that maybe I could be a lawyer
after all. Because I didn't know anything about law, except Boys'
State. I ran for chief justice of Boys' State.

Morris: Did you win?

Hall: I don't think so. That was also my first association with Sacramento.
I had never been to Sacramento until the American Legion sponsored that
high school project.

So I transferred to Boalt and completed there. Pete Wilson was
there — that's where I met Pete.

Morris: Was he already interested in government and politics?

Hall: Oh, yes. Absolutely. As a matter of fact, that's why he's got such
a poor record as a legal student. He didn't pay any attention — he
tried, I guess, but —

Morris: He was more involved in student government?

Hall: He was too wrapped up in Republican politics, earning a living, and
various campaigns.

Morris: While he was a student in law school?

Hall; Yes, sure. He had first really gotten active, I guess, in the '60

campaign for Nixon. So he knew [Robert] Finch and he knew all the

players, Herb Klein. Then in '62, nobody knew what to do, really.'
Most people stayed away from the Nixon debacle.

Pete Wilson, Arnholt Smith, and Other San Diego Republicans

Hall: Pete was always organizing the Republican clubs and pushing things.
Morris: As a volunteer?

Hall: Oh, sure. Well, I guess he was a paid advance man in the '60 campaign.
1 don't know what he did in '62. Nineteen sixty-two was the summer
when everybody should have studied for the bar. He went off to
Florida and I don't know what he did, but he flunked the bar down
there. He's got a whole string of losses as far as taking the bar.
He finally passed it. But that was one of the reasons he came to

Hall: San Diego. We had stayed in touch. I can't remember how we

communicated, but eventually he showed up in San Diego. Herb Klein
encouraged him to come there.

Morris: Herb Klein was based in San Diego at that time?

Hall: Yes. Herb was editor of the Union, I believe. He was something more
than political writer, because [Frank! yn C. "Lyn"] Nofziger was the
political guy on the Copley Press. That's why this network is all
so interesting.

Morris: A startling number of San Diego people emerged as political leaders
in the '60s.

Hall: That's right.

Morris: Who was the center of that?

Hall: That's a difficult question. If you want to say who was the center —
the actors were C. Arnholt Smith; Les Gehres, who was Arnie's man
and was the perennial chairman of the Republican Central Committee
down there. Les was a retired admiral. Frank Thornton was basically
Arnie's man too. Frank was not prominent from the standpoint of being
out in front the way Les was — Les' Gehres. But certainly Frank always
knew where the political money was going and where it was coming from.
And then, of course, Arnie was the big man in town.

Morris: Were they just generally interested in politics or did they have a
specific cause in mind?

Hall: Well, Arnie Smith had Arnie Smith in mind, always. He was a junior
class Howard Hughes, when you get down to it. My father's got
theories on this which may or may not be accurate, but could be. The
family name originally was Schmitt. During the furor of World War I
there was a lot of anti-German activity. They were all young people
in high school, and my father remembers that Arnie had a hard time.
They finally apparently changed the name to Smith, and Arnie went to
work for Bank of America or one of the banks. Had ten or twelve
years of experience in banking. Then in 1932 or '33 he was able to
get control of a bank. I can't remember what the name of it was. But
it became, eventually, U.S. National Bank. My father's theory is
that Arnie had always tried to prove himself as being a leader and
smarter than anybody else.

Morris: And he liked picking candidates and seeing his man get elected?

Hall: And the chink in his armor, which eventually developed, was because
of the banking — not necessarily necessity, but perceived-necessity
of getting state deposits. He was very active in the campaign for
either [Alan] Cranston or one of the state controllers in the early
'60s. It was advertised in the newspapers that Arnie on his yacht
was entertaining the Democratic candidate for so-and-so, and at the
same time Arnie was the county finance chairman for the Republicans.

The Republican Federated Women just couldn't understand that.
They refused to understand it and didn't like it a bit. Arnie 's slide,
in my opinion, began with that particular contradiction. A lot of
people started to move away from him at that point. We knew various
bankers and other people who had always been suspicious of his
conduct — his corporate conduct , his banking conduct — who were
competitors, some of them. Later, when I was practicing there, we
were always warned in our firm to be extremely careful in any dealings
with the Smith operation. So we were alerted in that direction and
eventually, of course, all this came unglued when I was superintendent
of banks. We had a situation when Arnie took over a bank in Orange
County. He immediately tried to substitute some real estate notes
and get his money back. Well, that was not legal. We came down as
hard as we could. It was a national bank situation, so the Comptroller
of the Currency had the primary jurisdiction. The FDIC regional
administrator and I went to the Federal Reserve and attempted to get
the Federal Reserve to exercise jurisdiction that we perceived they
had. They just kind of shrugged and said, "Well, it's up to the
Comptroller of the Currency." So eventually in October '73, the bank
was closed.

Republican Associates; Gaylord Parkinson as State Chair

Morris: Molly Sturgis (now Tuthill) recalls that you were involved in the
Republican Associates. Were you a founder?

Hall: Oh, no. No. That San Diego Republican Associates was an offshoot of
the Los Angeles Republican Associates that Bob Finch had helped create
in the '50s. I think Bob Walker was here in L.A. on that staff or
somehow associated with it. Somehow they started one down there.
It was up and running before I arrived in town in the fall of '62.

By the way, on who was central to activity in Republican politics
in San Diego County. The core activity — there was a branch that
revolved around Arnie, which was what I call practical Republican
politics. That was business and doing things for their own purposes.

Hall: There were also the hard-core anti-communist groups, or generally

people on that side, who were much stronger ideologically, and much
less traditional in their political activity.

Hall: And then there was the effort to keep the party together, which

Dr. Gay lord Parkinson took on, the whole Republican thing. Parky
became state chairman in '63, I think. He was the one who recruited
me for the [George] Murphy campaign. He was very enthusiastic about
getting young professionals involved in politics, in Republican
politics. And very enthusiastic about Republican Associates and very
enthusiastic about everything. He was a very enthusiastic guy. That's
where [Michael] Deaver came from, by the way. Deaver was his staff
guy for the state central committee and was in San Diego for, I
think, six months or maybe longer, being the staff assistant for
Parkinson when he was state chairman.

So we were all having a good time. It was easy to become a
leader in Republican Associates in those days because they always
needed money. I had $100 to spare; so I gave them $100, and I got
on the executive committee. Not an unrelated act or series of
actions. Bob Walker was the director. When Pete came to town, we
got him in as the assistant director. Pete and Bob rarely saw eye-
to-eye. Bob was very, very conservative. Pete was more on the
practical-politics side. He had been around Nixon; he had been
around the national campaign, so he probably knew more about the ins
and outs of political campaigning than Walker did. Walker was much
more ideological. We had a big battle, and lots of people got
unhappy when Walker had a picture of Goldwater on his office wall.
We were supposed to be — during the primary in '64, we were supposed
to be —

Morris:
Hall:

Morris :

Hall:

— nonpartisan?

Well, nonpartisan is not the right word. We were non-endorsing. Bob
was obviously leaning in Goldwater 's direction, as many of us were.
But we had to draw some lines. So that became a little bit of a
controversy.

What appealed to you?
recruiting pitch?

Why did you respond to Dr. Parkinson's

I really don't know, now. It was exciting. I was twenty-nine

years old. The idea of being involved as a county chairman, something

I had never done before, was —

County Chairman for George Murphy ' s 1964 Senate Campaign

Morris: You were the San Diego County chairman for Murphy?

Hall: — for Murphy — was a very challenging and exciting thing. I liked

Murphy. I grew up in an anti-communist atmosphere, and I identified
with a lot of the things that he espoused. Finch was the state
chairman, and that gave it balance as far as I was concerned.

Morris: Now, you already knew Finch? Or this is how you got to know Finch?

Hall: I must have met him. But I didn't know him. I'm quite sure that
Pete had introduced me to him at some point along the line. Of
course, I knew Herb and I knew Nofziger and I knew all of the
political players in San Diego. So I got Tom Hamilton's permission.
Tom had been Republican county chairman in 1948 and had basically
been a Warren-type Republican.

Morris: That goes way back.

Hall: Yes. He had been on a business trip to New York, and while he was

gone they had a coup and threw him out. From that point forward, he
didn't have anything to do with Republican politics. He felt that
it was a dirty game.

Morris: The Arnholt Smith people threw him out?

Hall: No, it was really probably some precursors or predecessors of the
right-wing crowd that I traveled with, who felt maybe that —

Morris: Taft people?

Hall: Maybe. Could be. I don't know. He's got all the names. I didn't
try to figure that out. Tom's attitude from that point forward was
a pox on everybody's house. He wasn't going to be in politics. But
he has said that when I came to him as a young associate in the
firm and I had worked directly with him in corporate law activities
and was really closer to him than anybody else in the firm; when I
came to him with this request, it was vicarious involvement from
his standpoint. So he convinced the partnership that I ought to be
given the time to do these things.

Morris: Did your firm encourage this kind of — or community activity in
general by its young associates?

Hall: Not really. If it came up, sure, they would consider it. They

didn't tell everybody absolutely no. Those were the days when we
did a lot of criminal defense on an appointed basis.

Morris: Public defender kind of thing?

Hall: Yes. This was before paid public defenders.
Morris: Pro bono publico.

Hall: Yes. As a matter of fact, the only real trial experience I've had
is in criminal defense work for dope smugglers. [chuckles] And
that's where I first met Willie Brown, by the way!

Morris: You shared the defense?

Hall: No. He used to show up for his clients in the same courtroom

where I'd show up — in the federal courthouse down there. I observed
him at work down there. He wouldn't remember anything like that.

So, between politics and writing briefs and doing the criminal

defense work, I didn't earn a whole lot of money for Luce, Forward,

Hamilton and Scripps. But that seemed to be all right. Particularly
when we came up with a winner.

And Murphy was the only one who won in '64. That automatically
made our campaign look very good and made me look good.

Morris: In San Diego County, or in connection with the rest of — ?

Hall: Also with Finch, and to a certain extent, I guess, with [Robert]
Haldeman and some of those people. Because Haldeman was on the
state coordinating committee for the Murphy campaign. We had
resisted — I used to carry them around with me, just to remind
myself about experts. [shuffles through papers]

The billboards they sent down to us were just awful. They were
a whole hodgepodge of slogans and a cameo picture of Murphy and a
map of California. It was orange, white, green and black, I think.
Just no theme at all. We couldn't understand it.

Morris: The Murphy state committee put this out?

Hall: Yes. When I saw this, I said, "We're not going to buy those. We're
not going to pay for them. If you want to put them up, that's your
business. But we're not going to do that." I went to our local
advertising agency and personally designed the Murphy board. And I

Hall: think that impressed Finch, that we had the guts not to take dumb
orders from headquarters. We raised our own money, and we did a
lot of things that were unique. So Bob and I established a pretty
good relationship through that process. We had our difficulties
in the campaign, because I didn't know what I was doing. But Murphy
didn't know what he was doing. Nobody in that campaign knew much
about campaigning .

Morris : Were there any ideas about what Murphy might do as Senator , or was
he mostly campaigning on the anti-communist thing?

Hall: Oh, it was not just anti-communism. Murphy was going on his

experience as a labor leader for the Screen Actors Guild. His
experience generally with Technicolor and various other business
organizations as a public relations guy. But he had a standard
speech. I still have the film. If you've got a kinescope or
whatever they used in those days for TV stuff, I've got a couple of
reels of film of Murphy presentations. You know, the old video —
this was before videotape, they used celluloid.

I have never thrown these things away, simply because I
don't throw much away. We still have that and some tapes, I think.
Of course, the records that were produced.

Basically Murphy was running as a patriot and as a person
of sound judgment and long experience. He used to tell tales
about 1939, and that would impress poeple. He was a good personality.

Morris: Did he seem to go over better in San Diego County than Mr. Goldwater
himself did?

Hall: Well, we didn't see that much of Goldwater, for one thing. Murphy
of course had to get a high vote in San Diego and Orange County in
order to counteract the northern California syndrome. [chuckles]
It's true. But also working to his advantage was the fact that
Pierre Salinger had been appointed Senator. A lot of people felt
that the press secretary to the president being appointed Senator
from California when he really hadn't had that much residential
experience in California —

Morris: Other than that he'd been raised in California, and his mother
still lived in California —

Hall: Still, he had been away a long, long time.
Morris: It's a fascinating debate.

Hall: That was the slogan on the billboard that I designed: "Elect a
real Calif ornian."

Morris: Did you also push whether or not Salinger was eligible to run?

Hall: Oh, all of that.

Morris: All of that.

Hall: All of those things.

Morris: Did you bring the suit? Was that your committee that brought suit?

Hall: No, that was Finch. That was their business, from the state

campaign. But Pierre was not an attractive political candidate.
Murphy exuded the stability and responsibility and all the rest of
it.

Murphy and Ronald Reagan

Morris: Did you run into Mr. Reagan at all in that campaign?

Hall: Yes, and that was the first time. We had a rally at the convention
center in San Diego, and as I recall, Nixon was on the program,
Reagan was there. It was a Murphy rally. Nixon was there for
Murphy. Reagan was there for Goldwater. Murphy introduced me to
Reagan. He had some comment to make about Reagan. Just kind of an
offhand "Well, he's around making speeches." It was not particularly
warm and friendly.

Murphy was Murphy, and he's got a hell of an ego. He was the
candidate and Reagan was just another one of the speakers on the
program. So there was a very definite either rank or coolness
attitude that I picked up on. I was interested in meeting Reagan;
first, because everybody knew who he was. But nobody considered
him a politician. He was strictly there as Chuck Conners or one of
these other guys would be.

Morris: A celebrity —

Hall: That was kind of the atmosphere of the time.

Morris: Would it have been a comment about their days together in the Screen
Actors Guild?

Hall: No, because there was no extended conversation that I can recall.
We didn't talk about this at all. Interestingly, though, there's
a guy named Frank Winston who used to work for Bill Bagley (Winston's
up in San Francisco), who has had a strange career. He's a military
academy graduate and was a White House military aide. As a matter
of fact, he says — and I don't see why Frank would make these things
up — he says he was the first military aide to a presidential campaign
as a go-between in the '52 campaign.

Morris: With the military?

Hall: He was recovering from Korea wounds, didn't have anything to do.
They attached him to the campaign, and after Eisenhower won,
Eisenhower asked him to be the assistant military aide. He
basically was the aide to Mamie Eisenhower.

But anyway, he was telling the story about being with Pat
Frawley when Frawley made the offer to Murphy to come on board at
Technicolor. Also being with Murphy when they were planning a
Christian Anti-Communist Crusade rally here in Long Beach; Murphy
being called by Reagan, with apparently Reagan asking to be on the
program and Murphy carrying on a conversation about "It's kind of
late to come to the party, but maybe we can give you the flag
salute or something like that." With apparent references to the
time of the House Un-American Activities hearings and the fact that
they weren't too sure whether Reagan was going to sneak out of town
before he testified.

Morris: Before the HUAC testimony?

Hall: Yeah, this was back in '50 or whenever it was. You know, it's just
a little gossipy vignette, but it would be curious sometime to get
behind that. But the idea is that Murphy didn't have any great
respect for Reagan as a Republican, obviously ; Reagan was a Democrat
until '62. So Murphy always kind of looked down his nose at him,
because Murphy had been out there slugging it out and making speeches
to Republican women for a long, long time.

Morris: Was Murphy appearing at the Christian Anti-Communist Crusade, or
was the crusade putting on a rally for Murphy?

Hall: Oh no, this was in probably 1960, I would guess. Or maybe '58.
Sometime along in there, when Dr. Schwartz was really active.
Murphy was part of that. That was used against him, because
Pierre and everybody said he's a Bircher and all the rest of it,
which he is not. But Pat Frawley was heavily involved in all of the
activity, and Murphy worked for Frawley.

Morris: It's amazing how far back some of these roots go.

Hall: It is. It's great fun to piece it all together. And also the

various attitude changes over the years. By — when did we land on the
moon? — August 14, 1969 — Murphy and I had dinner at Reagan's house
with Reagan and Nancy and maybe there were only a few other persons
there. And we watched the moon landing together. So there has
always been a cordial relationship between them when they stay away
from professional things.

Morris: Were you there for dinner, or was it getting some of the issues of
the day aired out?

Hall: No, it was strictly a social and also to see this event.
Morris: Were your ladies present?

Hall: No. No, I'm quite sure. I think my then-wife was ill. She was still
having her back problems.

So that was a real highlight. Very historic all the way around.
But I have said to Murphy — he had his eightieth birthday last year,
I guess it was — again, I happened to be in Washington on the right
day and ran into somebody and they said , "Oh , are you here for the
birthday party?"

I said, "What birthday party?" and we went through all that
routine and finally I ended up at Murphy's birthday party, where he
'also was announcing or introducing his new bride. I think it was
either on that occasion or some other occasion when I visited with
him after he was out of office and pointed out to him if it hadn't
been for his victory Ronald Reagan never would have been elected
governor of California. Murphy was the first movie guy to hold
high office. That just cut away the problem of somebody coming out
of the motion picture industry and going into a high governmental
office without any prior political experience. That was Murphy.

Morris: Did he also establish credibility for a more conservative candidate?

Hall: Oh yeah, sure, of course. Murph's personality is a winner. I mean
he's a charming Irishman. He is able to make the speeches and
prepare the way for conservative votes. Convince people where their
roots are. Reagan very much is in the same mold.

Morris: And you were of this same mold, too, at that point, as an attorney?

Hall: Well, being an attorney doesn't have anything to do with it. I was
brought up in a household that was very free-enterprise, very
Republican. Although we also were brought up in a household that
was an Earl Warren household. We believe in nonpartisan local
elections to avoid the problems that we get into when we have a
dominant national machine running the local government. We have
avoided that to some extent in San Diego.

I was brought up with the American Legion and the flag and my
speeches and everything from high school on. And, of course, our
family has always been oriented toward participating in school
activities and school government and athletics. My sister is active
and I'm active. She's much more liberal than I am, but we have
always had a history of kind of believing in the slogans. Serving
the country and serving the community and doing all those good
things. It's a combination of my mother's effervescence and my
father's stability and his understanding over the years of how
things ought to work.

Morris: When Mr. Finch was elected —
Hall: We're going to —
Morris: — have to stop this?

Hall: At least let's run down in five minutes. Because I've got to go
immediately to the car and go out to the airport.

Liaison Between the 1966 Finch and Reagan Campaigns

Morris: Right, I understand. When Mr. Finch was elected lieutenant governor,
there are some echoes that the people close to Mr. Reagan had some
reluctance about working with Finch because he was "a liberal."

Hall: Oh, absolutely, My role in the '66 campaign was acting as a bridge
between the Finch campaign and the Reagan campaign in San Diego. I
had told them, told everybody at that time, I didn't want to be
chairman of anything, because I had to learn how to practice law
and earn a living. I had taken a whole lot of time out of business.
It was beginning to get on people's nerves, I thought, at the firm.
So I tried to stay in the background and act as a liaison between
these two campaigns. I was very sympathetic with Finch, and I knew
generally that he was an upstanding individual who would make an
exellent lieutenant governor and all the rest of these good things.

Hall: I trusted him and I felt that he had a good grasp on things. And

I liked the Reagan campaign; all of my friends were involved. Gordon
Luce and all the troops were running that. I was one of the few
people who knew Finch reasonably well, and knew the Finch people
reasonably well. I was known in both camps. So when there was joint
fund-raising and there had to be a split of the take, or whatever
it was, I was usually involved in that. I was, I guess, on the
finance committee of the county central committee at that point.
And I was Murphy's guy in town. So I was popular among the lawyers
because those who wanted to be federal judges knew they ought to
come around and make acquaintance.

Morris: They'd take you out to lunch?

Hall: Well, it wasn't quite that flagrant, but still, it was part of the
whole mix. So when anybody started getting nasty on one side or
another or stopped communicating — and that's usually what happens —
they stop talking to each other. Then they sit in their separate
offices and stew about what the other side is planning, or how they
screwed up, or why didn't they call. It's non-communication. And
eventually they get set in their positions, and they get all worked
up. Then somebody does something and it starts a war, and there's
public comment made, and that is disruptive to a political campaign.
That is not a good function if you're trying to get votes. You're
supposed to keep everybody happy and supportive of the campaign.

Add Reagan votes and Finch votes so everybody gets more votes.

That's right. Sure.

What did they mean when they said Finch was too liberal?

I really don't know. Bob may have taken some positions on equal-
housing measures. This is all guesswork. I really can't remember
what the issues might have been. It may have gone back to Nixon
staff work that he had done in the fifties for Vice President
Nixon. I don't know. But he was certainly identified with the
liberal wing. It may have been the old Republican organizations.
There was a Republican Assembly, and these were typically classified
in an ideological vein.

Morris: By then there was United Republicans of California, too.

Hall: UROC. And Republican Assembly, and there's a more recent organizaton
whose name escapes me. Anyway, he probably had catered to one or
another of these organizations and gotten the hard right unhappy
with him. And that sticks.

Morris ;
Hall:
Morris:
Hall:

Hall: He did not make a good impression, also. I have to say that Bob —
the first time I introduced him when he was starting his campaign
in San Diego, we got a group of dentists and doctors and some guys
we thought had money together for breakfast one time. I stood up —
I was the host and I introduced him. And Bob stood behind the
table, with his knuckles on the table, so he was kind of supporting
himself, looking at the table when he talked to these people. Now
I had stood up because the only way I know how to talk to people is
to look at them and talk to them. This was a group of maybe
fifteen people, so it wasn't as though he was overwhelmed by an
audience. The fact was that they were too close to him.

Morris: Physically.

Hall: Weinberger is like this, too. I don't know whether you've interviewed
Cap. But Cap will look at you sometimes, but he doesn't see you.
Very often he'll be looking over at the corner or he'll be looking
down here. All the time! He still does it! The first time I ever
met Cap, he was the state central committee chairman. Pete had
put on a gathering of our Republican club in law school. Another
situation where there were a scattering of people in a room, maybe
ten or fifteen people. Cap, chairman of the state central committee,
stood in front of this group and alternately looked at his toes and
looked at the line where the ceiling and the back wall joined
together. Never looked at the audience!

Morris: Avoiding eye contact.

Hall: Absolutely. Absolutely. And when he makes eye contact now, it's

not real eye contact. I'm sure that he's focused all the way through
you. Watch him on television sometime. He's just got a non-focused
look. Watch him when he testifies before a committee. He will
be looking in the direction of the committee, but you can almost
tell that he's not focused. Because what Cap does is read a scroll.

Morris: He's looking inside.

Hall: He is looking inside his head, and he is always thinking about how
the words are going to come out, and what they're going to sound
like. It is non-spontaneous.

III SUPERVISING CALIFORNIA BANKS, 1967-1970
[Interview 3: April 26, 1985 ]##

Minority Economic Development

Hall: The other habit that I got into, because I was running around all
the time, was to take notes in a spiral-bound notebook.

Morris: As things were happening.

Hall: Phone calls, ideas, if I was on an airplane and I want to make a
list of things to do, that was where it all went. Notes of
conversations, things that you would write down on a yellow pad as
a lawyer. Essentially, there were so many different things going on
that if I tried to keep subjects separated, I'd have a box full of
paper. So everything went into the spiral-bound notebooks.

Morris: Was it your lawyer's training that led you to do this?

Hall: Yes. I would guess so, even to the format. This is the typical law
school notebook with the wide margin, so you can annotate it. The
intention was to be able to go back and annotate these entries and
try to explain them, but I have never done that seriously.

Morris: So that you had a running record in case there was a beef about
something?

Hall: No, no. It's more of, technically, a memorandum. Something to remind
you of the conversation and keep track of things. It was not for
purposes of making a record for external showing.

Morris: Right. [noise on tape] Let's see how much of this outline you can

get through before you say, "That's enough." My first area of questions
is on your work as secretary of banking, in which you were very

Morris: much involved (it looks like) in minority economic development.
Was that program already set when you joined the Reagan
administration?

Hall: Basically, the whole thing started with Bank of Finance in Los Angeles,
when I became superintendent of banks in 1967. The most serious
problem that was on my desk was Bank of Finance, which was a black-
owned bank in south-central Los Angeles. The examination force
was very excited about this bank, because it was always teetering
on the edge of disaster. So, I had to become educated on the
economics of the black community and the disadvantaged community,
basically. I met with their board of directors on a number of
occasions. I think it was probably at that time that I met Tom
Bradley.

Morris: Was he on the board?

Hall: Yes, that's my recollection. All of that leadership community in
south-central L.A. was in this thing, because it was very symbolic
to them. I learned how they sold stock in black banks. They sell
it on Sunday morning from the pulpit. Being a securities lawyer,
I felt this was probably not a good way to bring people into an
investment. It was obviously very emotional and very symbolic, so
I wanted to make sure that we were not going to be faced with a
failure. We worked quite carefully with the bank and with its
management and with its board to try to work things out, which we
did.

I was fortunate that I didn't have to close any banks when
I was superintendent of banks. I attribute that to a well-trained
staff and getting on problems before they really got out of hand.
We had a better economy. They had been through the depression in,
say, '66 — it was a little recession — and the economy was reasonably
stable and was on an upswing. So we had good times.

Morris: Was this your first direct contact with black community leaders,
or becoming involved in the minority community?

Hall: Yes. I was fundamentally ignorant. Remember the Watts riots were
'64. We had continuing problems in '66, '67 in various parts of
the country, so it was a front-page issue. I had probably met Bob
Keyes somewhere, either in San Diego in campaigning for Murphy,
or one way or another.

Morris: He was with who at that point?

Hall: I don't know, but he's from San Diego.

Hall: My family, my father in particular, has always in one way or

another participated in helping minority families. Not necessarily
by charitable contributions or organized activities, but by
assisting individuals in the minority community. Whether it's the
Mexican-American community or, literally, the Mexican community in
San Diego; that is, non-citizens who have lived there forever, or
the black community in San Diego.

He pretty well inculcated us with the attitude that you judge
somebody by their performance and not by their color, which has
continued, interestingly, to the current date. He and Clarence
Pendleton, the chairman of the U.S. Civil Rights Commission (Clarence
is also a director of Great American First Savings Bank in San Diego) -
he and my father sit on that board together, and they talk about
how to handle things. Clarence is a little more active in his
language than I would prefer but, still, he provides some straight
forward commentary that's necessary to show that there is more than
one opinion in the black community nationally.

So anyway, the Bank of Finance was my introduction, because
that was something that I had to get after.

Morris: Shortly after you took on the job as California superintendent of
banks?

Hall:

Morris:

Hall:

Morris;
Hall:

Immediately. It was on the desk and it was trouble,
meeting with these guys.

So I started

Did you know that when you took the job? Had the people in the
governor's office said they'd been having trouble with them?

The people in the governor's office didn't even know there was a
superintendent of banks. The Banking Department is not an important
element of government from the standpoint of the governor's office.
It is a thing that is supposed to operate on its own, never show up,
get the work done, and keep quiet. The idea is, don't have any
problems.

No political visibility.

No, no. Gordon Luce's attitude* — this was all of our attitudes,
really — was that it was not going to be used as a vehicle for paying
off supporters who wanted to get bank charters or wanted to expand

*Luce was secretary of the Business and Transportation Agency, in
which the State Banking Department was located organizationally.

Hall: their banking operations through new branches. But there would

essentially be zero interference from higher levels of government,

as far as the jurisdiction of the superintendent of banks. That
was clearly understood and articulated.

Wells Fargo Bank Goes National

Hall: The result was that you ended up running your own show, which I liked
very much, and you reported when there was a problem. For instance,
when Wells Fargo converted from a state charter to a national
charter in mid- '67, that took a big chunk out of our income, and
also was a prestige blow as far as the state banking system. Here
was one of the largest state-chartered banks in California — I think
at that time it was the largest state-chartered bank — and for
reasons that had piled up over a period of time, they decided they
were going to convert to a national charter.

Dick Cooley was the president at that time, and Dick, I think,
believed that he would get a better break from the Comptroller of the
Currency in expanding into southern California if he was a national
bank. It turned out that it wouldn't make any difference one way or
the other.

Morris: Would you, or anyone else in the Reagan administration, have made
a strong effort to have them not go to a national charter?

Hall: Oh, we did. But they, through their corporate strategies, had

decided they were going to do it, and nothing we could say would
deter them. We couldn't offer anything, because they hadn't applied
for anything; there wasn't any bargaining going on. All we could
say was that we were going to administer the law in an appropriate
way , and that was that .

Gal-Job Program

Morris: About how much of your time as head of the banking department was
spent on the Cal-Job program and developing minority credit lines?

Hall: The introduction was Bank of Finance. Then came a bill that was
imported from New York, which called for the superintendent of
Banks to enter into a small-business lending program. The bill was

Hall:

Morris:

Hall:

Morris:
Hall:

not satisfactory to me, because I was in the business of analyzing
credit and criticizing bad loans. I didn't want to make bad loans
at the same time. And the small business loans, particularly in
minority lending areas, are unbankable loans, typically.

The reason that bankers were wary of minority loans was that
there weren't very many experienced minority businessmen who could
come up with collateral that would support a line of credit. That
was just the nature of things. That's what I learned in the operations
at Bank of Finance. They were trying to finance an economically
depressed area where there were no liquid assets available for
collateral; everything was marginal. So it was almost a continuous
cycle of trouble.

Whose idea was this legislation patterned after New York's?
that coming from the legislature?

Was

I think, yes, the Democrats brought it up. There may have been some
support from some Republican legislator. Some place along the line
the Republican staff might have been supportive.

But I jumped in and said, "No way. I am not going to do this.
It is not appropriate for the superintendent to do it." And I came
up with the alternative of the California Job Development Corporation
Law. I negotiated that personally with the staff and with the authors,
And we developed this system of a state board and a state guarantee
pool and regional corporations — Cal-Job corporations — which would be
put together, each of which would be required to have a credit
committee made up of a majority of commercial bankers. That was
the key control valve in the system. So that we could get reality
and it would not just be a government giveaway program. It would
be credit analysis and assistance to minority borrowers.

Now, we did not expressly target minority borrowers. In order
to satisfy my own concerns about constitutionality, the bill was
written so that areas would be described in terms of negative
economic indicators.

Geographic areas?

Yes. So that you would identify disadvantaged areas within the
state within which these guarantees or loans would be granted.
Now, it turns out that those are minority areas, obviously.

Morris: Do you mean black, or some hispanic and some white?

Hall: Some hispanic, but mostly black, because those tend to be the most
depressed areas in the state. So I satisfied my own constitutional
concerns about favoring one race over another, and at the same time
I satified my policy goals of providing credit in a credit-starved
area of the state. I felt this was a proper state function and
that I could stand up and testify for it and still keep my Reagan
uniform on.

Morris: Did you have to clear this with the governor's office or Gordon
Luce?

Hall: Gordon Luce. But nobody was paying much attention. They had taken
a basic policy position, of course, that they didn't want to get
into anything that would cost any money, and they didn't want to get
into a situation where we were in a giveaway program. Certain
fundamentals were observed, which I already knew, so there wasn't any
problem.

Morris: Was there much positive feeling that it was a good thing to help an
area of the population that was not doing very well?

Hall: I have the impression that nobody was paying attention, that they
said, okay, that they weren't going to oppose it. They weren't
going to jump up and down and say, "That's the greatest thing, we've
been looking for this and we've finally discovered it and isn't that
wonderful." Nobody gave a damn, basically.

Morris: How about Bob Keyes?

Hall: Bob — I can't remember that he was involved. This would organizationally
be within the legislative unit's activity. Bob was on the
community-relations side. Those two really didn't coordinate very
much, from what I could gather.

Morris: But as a black man in the governor's office, I would think that

people from the black community would be going to him saying, "This
is a good thing" or "Can we change this?" or "Let's help Bob get
this passed."

Hall: I don't think [laughs] anybody paid any attention to it. It was

essentially something we cooked up as a defensive measure because,
if it had not been for the impetus of somebody putting that bill in,
we would not have come up with a program. It was reactionary, when
you get down to it.

George Deukmejian on the Cal-Job Board

Morris: Did the legislature have any beef with your legislation?

Hall: No, it was negotiated out and it passed and everybody seemed to

be happy with it. As I recall, George Deukmejian carried it. George
was the only legislator who regularly attended the meetings of the
Cal-Job board.

Morris: Yes, I noticed his name on one of the board lists.
Hall: That's right. As I recall, he carried the bill.

Morris: The only other legislator was Bill Campbell. I take it he didn't
come?

Hall: No. Most of the time the legislators, when they get onto these

committees or boards, don't show up. Their staff guys are the ones
who organized the thing in the first place. The legislator signs
his name and makes the speech and gets the votes and it passes, and
then the staff guy goes to the meeting.

Did Deukmejian have some special interest in it or was he just being
a punctilious legislator?

I think George has a fundamental interest in not only minority
affairs, but generally the activities of a community in all respects.
George is an ordinary guy. His approach to life is very simple. He
is not pretentious at all. He's got a great deal of pride, and
that shows sometimes, but basically he is a person who is interested
in the affairs of the common people, black, white, or whatever.

Morri's: At that point, did you get a sense that he — you mentioned the

word pride — that he has a strong sense of being of Armenian descent,
of which there aren't terribly many in the United States?

Hall: I don't think that — the pride comes from more recent events, really.
On occasion he can be quite cold, if he feels that his territory is
being invaded , and that ' s obviously more evident now that he ' s
governor.

Morris: He's quite visible in a number of areas of legislation while

Mr. Reagan was governor, and I'm trying to get a feeling for that.
Whether the governor's office was searching people out, or whether
Deukmejian was wishing to be identified with the governor's office.

Morris:

Hall:

Hall: George was extremely loyal. He was somebody we knew from '62 on,
I guess; earliest times. He was more conservative than his
classmates, [John] Veneman and [Robert] Monagan and Pete Wilson
and [William] Bagley, although he was part of that same group.

Morris: But they don't usually identify him as part of the group.*

Hall: That's interesting. [Perhaps that's] because he's not a boozer and
he doesn't go out and chase around, and he's a family man and he's
quiet and he's not flamboyant, and he just doesn't want to hang
around at Frank Fat's very much; never has. Most of the rest of
them, without naming names, were of contrary inclinations.

Morris: So he wasn't part of the young Turks.

Hall: So to speak, [laughs] Wrong combination of words, talking about
George Deukmejian.

Morris: You're right, yes. Particularly this week.

Hall: Anyway, George was always ready to carry legislation. He was always
ready to stand up to the line, make the speech, do the work, do the
homework, find out what he was doing. He was a good legislative
lawyer. He understood quickly what the objectives were, and any time
that I dealt with him, it was not a struggle to explain it to him.
He knew before I did what was going on.

Morris: On this Cal-Job board, I assume that Deukmejian and Campbell were
appointed by the legislature, as most committees go. Did you get
to make suggestions for the other people on that Cal-Job board?

Hall: Well, that kind of thing usually gets built into the legislation.
If the author is enthusiastic about the project, then he builds it
so that he will be the guy. And Rules "[Committee] is happy to
operate in that manner, they'll appoint the individual.

Morris: It wasn't a governor's appointment?

Hall: No. The governor's representative — of course the superintendent

of banks was (I can't remember who exactly was on that Cal-Job board)
the superintendent of banks was, and I think —

*See interviews in this series with Monagan and Bagley.

Other Board Members

Morris: I couldn't find a list for earlier than '72. That includes Gig
Rudell, Ralph Larson, Donald Pearson.

Hall: Pearson ?s there as superintendent.

Morris: He was your successor?

Hall: Yes.

Morris: Okay. William Stevens from San Diego. Was he your — ?

Hall: Yes, he — well, at that stage the greatest difficulty was getting

the local corporations started, getting the bankers to get involved
in the process of setting up the regional corporations. Those
bankers with whom we had the best relations , we would go around and
talk to them and get the California Bankers Association and others
involved in this process. A great deal of my effort was explaining
to them that it was not a giveaway program; that they did have
responsibility in this area; that it was good for them, from the
standpoint of the banking industry and individual banks, to be
involved; that they were going to get guarantees for their loans.

Morris: It was going to be their money, but the state would insure it if
it went bad?

Hall: Sure. That's right.

Morris: Yes. And were you selling the idea that it was a good thing to be
involved in improving the status in economically disadvantaged
areas?

Hall: Incidentally. But being of a similiar mind-set , what I was telling
them was, "We've got a lot of trouble and you guys have got a lot
of trouble, and if you want to solve your problems you'd better pay
attention to this program.

"There are things happening out there that you must and will
become involved in, whether you want to be involved in them or not.
So let's get together and figure out how to handle this thing, and
everybody wins."

Morris: Were there minority persons on this board?
Hall: Oh yes, sure.

Morris: Who were they?

Hall: Well, that's what I'm trying to remember.

Morris: The other names I have may be after your time: Hillard Hamm.

Hall: No, Hillard was there from the early times.

Morris: .Richard Martinez from Los Angeles.

Hall: I don't remember him distinctly.

Morris: And Edwin Wang from South San Francisco.

Hall: I don't remember clearly. Hillard I remember, because Hillard got
into deep trouble. He later became a councilman in Compton and got
into a money problem, and got some free room and board from the
State of Calfiornia for a while. I'll give him the benefit of the
doubt and say he didn't know what he was doing. But the Cal-Job
program went together rather slowly, because it was difficult to get
the bankers organized and to get them to support this kind of thing.
Because they, as many conservative people normally would, felt
that it was going to be a giveaway program and not an effective
thing. So I had a lot of selling to do.

Staffing; Community Relations

Hall: I am looking in my California Blue Book to try to find the organization,
and I don't see it right offhand.* In any event, that's where
Lou Carter came from.** When I set it up in 1969, when the
legislation became effective, I interviewed people for the position
of executive director for the Cal-Job board.

Morris: And he was already in banking at Crocker.

Hall: He had been at Crocker, so he had a credential there. Lou came in
and he was the man who was in charge of the day-to-day activities.

*Handbook on state government, published every few years.
**See interview with Louis Carter in this series.

Morris:
Hall:

Morris;

Hall:

Morris:

Hall:

Morris:
Hall:

Was it important to you to find a black person with credentials?

No, not at all. It was important to find a person who had the right
experience and the right background. I interviewed several. There
was a white guy named Pat Bell, who I am still in touch with from
time to time, who had become interested in advising on a managerial
standpoint a black trucking company and had been successful in
that process and knew a lot about the — you know, he was a good
management guy, he knew where the problems were as far as obtaining
credit and where the conflict points were. Pat was a close runner-up.
But he was young, he was a little bit of a hippie to a certain extent,
a highly intelligent guy, and he's now a successful management
consultant in San Francisco.

Bell was with a bank?

No, he was all by himself. He was a free-lancer. He didn't even
call himself a management consultant; he was just kind of there, but
involved and very smart. He was a very appealing guy. So he and I
hit it off, perhaps because he thought it was amusing that the
Reagan administration had any interest at all in this kind of thing.

Did you find it an interesting program, since it was sort of thrust
upon you rather than something that you — ?

Well, having eventually created the program, I wanted to make sure
it worked, that we were not just playing a game. This is how I got
to know Chuck Manatt a great deal better, too. Chuck, who had been
around banking because of his law practice, made it a point to get
to know me well as superintendent of banks. And when he found out
that I was involved in a minority-affairs activity, he was absolutely
astounded that a black-hearted Republican like me could have any
interest at all in any of this.

Did you find that was a similar reaction in working with the
regional committees around the state, in setting them up?

It has puzzled both my friends, relatives, and if I say political
opponents, you'll know what I mean. They have never been able to
figure it out, why somebody who is as obviously individualistic
and conservative in his politics as I am would ever want to get
involved in this manner. Only the Libertarians understand.

Well, we're now talking about preconceived opinions about people.
That's right.

Morris: Anyhow, I assume that you spent a lot of time working in black

communities, that you would also have to go and explain yourself
to the black ministers and businessmen and things like that.

Hall: Except I was coming in with my badge on most of the time. I was

there very often as superintendent or banks, saying, "You have not
obeyed the rules. Your bank is going to be in deep trouble with
me unless you get it straightened out." So there was a great deal
of authority that I wielded in those days as far as the banking
community. And because the banking — particularly the Bank of
Finance — was so central to the entire community, then that spread to
a certain extent.

Realities of Bank Regulation

Morris: But in working with the officials of that bank (which had problems) ,
did they resist your suggestions, or were they, too, concerned
about the bank's solvency and welcoming your advice?

Hall: Yes and no. Usually what you run into in any troubled bank is

self-dealing. The directors think that it's their own pot of money,
and they play. So, you have to convice them that it's not a play
yard, that they're in serious business; that they are trustees,
they are required to perform for the benefit of the public.
It is a public honor and trust and they've got to perform that way.
You go through that routine and point out that there are also
felonies involved if they do certain things, and that we have the
power to do things about that. They get the message.

Morris: Yes. Does that message being conveyed then lead to a more
productive relationship?

Hall: Yes, absolutely. Because there are always people in those

situations who know everything that you're telling them, but may be
afraid, from social pressure or one reason and another, to raise
their voices. So when you come in and say this is the law and this
is the proper practice you should be following, they already know
that. They sit and smile and say that's right.

Morris: Are there cases when it helps to have somebody from outside the
organization come in and say — ?

Hall: Oh, absolutely. And, my current view of bank regulation in the

United States is that the bank regulators forgot that. They have
not been doing that over the past ten to fifteen years, and as a

Hall: result we've got chaos. That is actually what has happened.

Instead of treating these things before they became legal problems,
the federal regulators and the state regulators have allowed the
lawyers to take over the game, so everybody goes to court.

You cannot settle these things in court. All you can do is
either close the bank or allow some practice to continue that is
probably not a healthy practice. Those are the two results that
you get,, one or the other. And the judges very often don't know
beans about traditional banking or the practices of banking, which
are very informal in many respects. So the result is that you get
strange results, and we have a lot of people in banking now who
shouldn't be in banking. Because it's very difficult now to make
character judgments in the chartering process.

Morris: You're invading someone's privacy?

Hall: Yes, exactly. It's become so legalistic that you practically have
to condemn somebody of some horrendous crime before you can deny
him a bank charter. This is a very bad situation. We know that
banking is a public trust, but we are allowing all kinds of people
to get into it who shouldn't be in it. That's the way it is, and
so we've got wild problems from Continental Illinois up and down.

Morris: All the way to Walnut Creek. •

Hall: All the way to San Marino! The most expensive — for the Federal Home
Loan Bank Board — the most expensive problem that the Federal Savings
and Loan Insurance Corporation has had so far is right down the
street. Two hundred million dollars so far and going up. And, by
the way, I protested the companion bank.* The only time I've ever
tried to influence the state banking department since I left was when
they came out with the San Marino Bank. And it was so obviously a
vanity bank that was going to get in trouble that I called Taufer**
and said, "Don't do it"; and he said, "Well, we've got to do it."

Technical Assistance

Morris: You made a speech in 1972 to the Interracial Council for Business
Opportunity [ICBO] and you said that, at that point, technical
assistance was 41 percent of the credit extended in the program,
[see appendix]

*Bank of San Marino, which was closed April 8, 1983.
**Jack L. Taufer, superintendent of banks 1978-79.

Morris: That means over and above the loans being made you were providing
technical assistance, or that technical assistance was part of the
package?

Hall: The original bill, and I think the Democrats hung this on as part
of the negotiation, they wanted to be able to show immediate cash
return to the minority community. This is, as you know, the way they
play the game. They can then stand in their political meetings and
say, "We got so much money for the community, in cash." I
resisted it, but in retrospect it was probably useful to have the
Technical Assistance Grant Program as part of the Cal-Job program.

The first grantee was ICBO of L.A. — Interracial Council of
Business Opportunity of Los Angeles. At that time (if my recollection
serves me) Bob Kemp was the director of ICBO. I am now chairman
of the board of governors of Opportunity Funding Corporation, which
is based in Washington, D.C. The president and chief executive
officer of Opportunity Funding Corporation is Bob Kemp. We were
talking earlier about whether this is still going; I just got back
from Washington from an executive committee meeting of Opportunity
Funding Corporation. I have continued in this process since Cal-Job.

Morris: That's nearly fifteen years.

Hall: Yes. Now, when I moved to secretary of Business and Transportation
[Agency] I had the distinct feeling that the whole thing would
collapse if I didn't bring it along. So I brought Lou Carter to
Sacramento and set up the Cal-Job board within my operation as
Business and Transportation.

Morris: You just picked up the whole program and moved it to Business and
Transportation?

Hall: Yes. It's a man and a secretary, basically. When I moved to Human
Relations [Agency] , I did the same thing. The second move was
probably a mistake, but the first move I think I'm satisfied was
useful.

Morris: It sounds as if you had developed a personal commitment to see
that it worked.

Hall: I was afraid to let anybody else get involved, really, because I
didn't think anybody else was interested. I think I was right,
because after I left — it was under Earl Brian's regime — it went
into a skid, as far as I'm concerned. Nobody was paying attention.

Hall:

Morris:
Hall:

Morris:

Hall:

I was concerned that people would not pay atention to this. And I
felt a relationship with the bankers and the banking community and
the minority community and with ICBO and with the whole system — that
I wanted to make sure this thing stayed within a certain philosophical
line of activity. I did not want to get it expanded into a direct
lending program from the state level. I wanted to make sure that
the bankers were required to exercise their judgment in the process.

The whole thing was an educational program; that was really
what I finally justified. We were educating the minority businessmen
on how they had to present themselves to a banker, what kind of
information — they couldn't just walk in and say, "I need some money,"
They had to come in with a pro forma set of financial statements
that described what their business was and described how they were
going to use the money, and how they were going to make a profit
and pay back the money. It wasn't a giveaway program, it was
educating them.

At the same time, most bankers had never been forced to sit
with a black or Mexican-American customer and explain anything to
them. Usually, they never got to the desk. The next words were,
"No, we can't lend you any money because you don't have any
collateral," and that was it; no further conversation. Well,
this [program] required the majority banker to sit down and look
at a project and consider whether it was viable with the state
guarantee behind it.

Did the state guarantee in a sense act as the collateral?

Sure. That's the way it worked, basically. The borrower does not
have a bankable proposal — that was one of the conditions of the
program. He had to get turned down several times before he could
come to the Gal- Job Corporation for a guarantee. So it had to be an
unbankable credit. I had to put that in because the bankers would
complain you were taking business away from them. That was a false
claim, obviously, but that's always an easy thing for them to say
when they want to kill something: "You're going into competition
with the private sector," when in fact there isn't any competition
at all.

One of the comments you made was that — this was after the program
had been going for several years — that the banks were turning down
a lot of applicants for relatively small amounts. Did you make
any progress with this?

I think we were successful in getting the communication started
between banks and minority borrowers, the minority entrepreneurs,
gotten so that the banks think they invented the whole thing.

It's

Morris: Really!

Hall: Yes. You know, if you ask Joe Angelo at Bank of America, he says,
"Oh, we've always done this. This has always been part of our
program. " But in 1968 it was not part of their program. So I
look upon that as something that was very useful and a proper
result. It made absolutely no impact on the Reagan administration.

IV THE OFFICE OF ECONOMIC OPPORTUNITY AND THE GOVERNOR'S OFFICE

Even though there was an Office of Economic Opportunity operating — ?
Well [laughs], shall we talk about Lew Uhler?
Yes. Was this when you first connected with him?

There was absolutely no relationship in those days. The Office of
Economic Opportunity, the only reason it existed was because
statutorily it had to. And the object of the administration
was to kill it, and Lew was the hired gun. He was put in to shut it
down. (I'm astounded that that's not clear in the record some place,
because it was certainly clear everywhere else.) It was looked
upon as a radical, revolutionary organization, and had been operated
loosely in many ways, so that it did feed into the whole upset of
the '60s in supporting radical organizations, supporting anti-
establishment activity.

This is philosophically coming out of Washington, not just the
California program?

All of OEO during the Johnson administration was out of control.
There was a lot of money moving, and a lot of it moved into radical
organizations: community-based, hippie, anti-Vietnam, anti-what-
have-you. The OEO has a very checkered past. It came down
eventually to the — what was the agricultural — ?

California Rural Legal Assistance?

Yes. That's where eventually the whole battle, Uhler 's last stand,

occurred. And I guess if you think about it, there are some

similarities between Custer and Uhler. All of that was the governor's

office. None of the rest of us had anything to do with it.

Morris: We did talk to Mr. Uhler, unfortunately not about this.* The person
who interviewed him is more interested in tax limitation, which is
valuable, too. I tend to be interested in the OEO phase as a
step along the way. What Bob Hawkins1 view seemed to be was that
OEO was, I can't quote him exactly, but was providing jobs to more
white people than black people and that it, in a sense, emasculated
blacks.*

Hall: Oh, in many ways, of course. It was being used as a political

organization, an organizing vehicle, for all kinds of wild things.
Now, that was the point of view of the administration; that was
basically the conservative point of view: OEO is bad and we're
going to get rid of it. The money waste, it's disruptive, it is a
vehicle of Democratic politics, and we're not going to stand for it.

Morris: Nobody took the view of some of the OEO people that we are teaching
people who have been disenfranchised that they have rights in this
society and can get up and say their piece to the governing body?

Hall: I don't want to get into a debate, and I can't testify whether

anybody tried to show the bright side of OEO. What I know is that
as far as Ed Meese, and probably [Michael] Deaver and [George] Steffes
and others in the governor's office, OEO was negative and was not
going to be part of government if they could figure out a way to get
rid of it. They could not figure out a way to get rid of it, so they
put Lew in, who they knew to be a hard-core conservative. Lew had
been [John] Rousselot's campaign aide here in Arcadia — from this
area in San Marino or Arcadia — was a hard-core conservative, and
was looked upon as the perfect guy to go in there and either clean
it up or close it down.

California Rural Legal Assistance was a grantee of OEO. Lew,
with the approval of Ed Meese and the governor's office, took on
CRLA. The grant, and this was — you have to understand that I was
simply hearing about this and reading about it in the newspaper. I
didn't know anything. I was superintendent of banks; it was none of
my business.

Morris: None of these people were coming to any of your banks looking for
loans?

Hall: They undoubtedly were, but it was unknown to me. And I had no
connection with any of this, other than reading about it in the
paper, and occasionally we'd talk about some OEO problem when

*See interviews in this series with Uhler and Hawkins.

Hall: Gordon (Luce) and I got together. I was not in Sacramento;
remember, I was based in San Francisco, so I could see the
San Francisco scene a little more —

Morris: Which is where CRLA's offices were.

Hall:

Morris:
Hall:

Yes. I could sense, and I knew some of the plays that were going on
in San Francisco, but I didn't have anything to do with it. It
was none of my business, so I didn't get involved at all. All I
knew was there was obviously a problem here somewhere.

Lew took on CRLA; lost. They had the appeal. Ed Meese, even
though he had led Lew into this thing, did not pay close enough
attention to what was going on. It was decided that the California
case would not be presented to the three-judge panel that was
convened at the federal level to study this thing. Lew was not
permitted (by Meese) to present his case. Therefore, the record
was never made on his side of the issue, and it was a disaster. A
disaster for Reagan, I think, and certainly it was a disaster for
Lew.

I don't know the time sequence on this, but I may have been in
Sacramento in Business and Transportation by that time. But still,
nobody else had anything to do with it because it was theoretically
being run out of the governor's office. It was directly attached
to the governor's office. Thereafter, after the dust settled, they
reassigned it in the Department of Human Resources Development. Lew
continued for a period of time, I think, to head it, and Hawkins
eventually came in.

I was very sympathetic with Lew.
more about tax reform later.

I like Lew, and we'll talk

Had you known Lew in this Los Angeles area?

No, I'm from San Diego. I may have met him at political conventions
or fundraisers, but only very, very casually. I didn't know him at
all. I would say, frankly, I didn't know him at all.

V BUSINESS AND TRANSPORTATION AGENCY, 1970-1971

Secretary Gordon Luce Returns to the Private Sector

Morris: Did Gordon Luce have a kind of a cabinet approach to you and the
other departments under his wing in Business and Transportation?
Did you function at all as a group?

Hall: Very rarely. Each of our activities — Gordon is a great delegater,
and he was not one who wanted to get involved in banking. Maybe he
got involved in Savings and Loan, I don't know. But, certainly, he
would never come around and say you've got to do this, you've got
to do that. There were general directives as far as budgets and
government-economy procedures and various programs of the governor
which he was the communicator on. And we would all meet, of course,
on budget matters and things like that.

These tended to be individual departmental activities, and I
had a great deal of autonomy in what I was doing. I set my own
policies. I decided whether I would become involved in the National
Association of Supervisors of State Banks. I set state policy in
that field. If I felt that maybe I was going to tread on some toes,
then I'd probably send a memo, but I'd never get much of a response.
I was on my own. As a result, in '69 it got to be a problem.

I had become very sympathetic to the development of one-bank
holding companies. I felt that with proper regulation, we could
control the activities of the bank which was the subsidiary of the
commercial holding company in the banking system. Union Bank was
our best example. Harry Volk was the chairman of Union Bank; his son,
Bob Volk, was commissioner of Corporations. I had perhaps naive
confidence that with a good bank-regulatory system we could isolate
those banks from the commercial activities of the holding company.
If they wanted to get into the travel business or selling cars or
whatever they wanted to do —

Morris: The holding company?

Hall: — I didn't care what the holding company did, as long as they didn't
impact the bank negatively with those activities. This was contrary
to congressional policy. Wright Patmari was the leader of the House
Banking Committee. It was contrary to the quiet policy of ' the
Federal Reserve. The FDIC and the comptroller were ambivalent at
that time; they had really not come down on one side or the other.
So, I was actively opposing federal legislation that became eventually
the Bank Holding Company Act of 1970.

When the House bill passed in the summer of 1969, around
September I think, I wrote a vitriolic letter to the California
[congressional] delegation, those who had voted for it (and I think
everybody voted for it) , chastising them for this punitive legislation.
I got a letter back from Jerry Waldie that said I was a menace to
society and should be fired. I got a fast telephone call from Gordon
Luce, saying, "What the hell are you doing?" I got lots of static
[laughs], so, in retrospect, I should not have done that, but it
sure was fun.

It was also an indication, again in retrospect, that I should
have gotten out of government at that time. With my autonomy
and my isolation, my ego was getting out of hand, and that was not
good.

Morris: You're saying now that you had felt that your ego had become enlarged,
or you were feeling the power?

Hall: Yes.

Morris: You also commented to Gary Hamilton that you began to feel restless.*
Are they parts of the same thing?

Hall: Oh yes, sure. It was all part of the same syndrome, I think. I
had addressed the Stonier Graduate School of Banking at Rutgers in
'69 and laid out a program for restructuring bank regulation. I
had been mentioned for Comptroller of the Currency —

Morris: — Gordon Luce was also getting restive and wishing to get back
to what, San Diego? Was it the 1970 re-election campaign?

*Interview recorded on February 14, 1978, by sociologists Gary
Hamilton and Nicole Biggart. See Chapter I.

Hall: I was the guy who told Gordon that the slot was open at San Diego

Federal. My father was on the board. He called, he never asked me
whether I_ wanted the job.

Morris: That wasn't very kind of him.

Hall: Well, he's smarter than — that's him up there. [points to portrait
on wall]

Morris: I thought it might be, yes. You were his son, which would have made
that bit awkward, wouldn't it?

Hall: He knew I didn't know anything about the business. He's a smart

guy-

Morris: Even though you were superintendent of banks?

Hall: Yes, but that doesn't — he's a very, very practical person. I had

never been involved in the savings and loan business. I was simply
not a candidate on that list, so there was no wasted conversation
about that. He called and said that Jack Thompson had died
unexpectedly; Jack had been the president. Although things from a
public standpoint were okay, there were some problems internally so
that it was unlikely that Thompson's executive vice-president was
going to succeed him. So it was a wide-open situation. Now I have
to say that I didn't volunteer for the job, either, so it was kind
of a mutual understanding between my father and me that I wasn't
going to try and come into it. When I said, "Is it okay if I
mention it to Gordon?", he said sure, that would be logical.

Gordon was immediately interested. The contact was established;
this was some time May or June of '69. The search committee at
San Diego Federal, which was headed by Evan Jones, who is still on
the board down there, selected Gordon. Gordon cut a very good deal.
He essentially cut a deal for himself and Jim Schmidt.

Morris: Who had been with him in the agency?

Hall: Yes. Jim may have been at Home Federal Savings with Gordon, I'm

not sure. As a matter of fact, Jim had already left the agency and
gone back to Home Federal, I think, by early '69; within a few
months. What Gordon did was make a deal with San Diego Federal
that he could put Jim Schmidt in as managing officer at San Diego
Federal while he cleaned up his affairs in Sacramento. And then he
would move down toward the end of the year, which is the way it
worked. But we all knew that Gordon was — or I knew, at least — what
all the circumstances were and that Gordon was leaving.

Morris: Had Gordon talked to the governor and Meese about this?

Hall: Oh yes, sure.

Morris: So that they had advance lead time.

Hall: Oh yes, sure, they had a whole lot of time. Then, I think he

announced his resignation sometime toward the end of the summer, and
that's when Gillenwaters started to campaign.

Morris: You were just an innocent bystander because you were yourself
thinking of leaving government at that time?

Hall: Yes, sure.

Hall Becomes Secretary

Morris: At what point did it become clear that they were having difficulty
making a decision on who would be the successor for Gordon Luce?

Hall: It must have been the last part of November or early December.
Morris: Did Gordon say anything to you about it?

Hall: Yes. He essentially was the one who opened the subject and said,
"You really ought to do this."

Morris: So Gordon was part of the process of selecting his successor?

Hall: Oh, absolutely. I would say that if anyone gets the credit or blame
it ought to be Gordon, really, because it would have worked to his
benefit. Here is a person that he knew very well, who had worked
well with him. I think we worked well together. I don't think I
could have worked easily in the same office with him. But as a field
commander for him, more or less on my own, I kept him informed most
of the time and let him know what I was doing, generally. •

Morris: But the delegating aspect of his style would have been difficult
in a day-to-day relationship?

Hall: No, because with his immediate staff I think it's a very different

situation. I think he requires very close control over his immediate
staff, and I don't think I would have been comfortable in that kind
of arrangement. I don't know, maybe I would have, but that was not

Hall: the set-up. Gordon was very probably the one who presented this

to Meese and to the governor's office. He was the one who communicated
with me, and was also involved in the fact of deciding that
Gillenwaters was not the right guy for the job, I would assume.

Morris: And had Luce already cleared this with Meese and the governor before
he talked to you about it?

Hall: I have no idea. He is a very cautious person — Gordon is very, very
careful. He understands human nature as well as anybody I've ever
run into, so he knows that once you start a ball rolling, it's
hard to get it stopped. So it's hard to tell whether he would have
checked with him first and then with me, or vice versa.

Morris: Mr. Gillenwaters' experience was mostly public affairs, and he had
had experience in Washington, too.

Hall: That's right. He had been (Congressman) Bob Wilson's administrative
assistant.

Morris: Was that considered not a good trait for heading up the Business
and Transportation Agency?

Hall: My suspicion is, and continues to be to this day, that Ed Meese
has a fundamental aversion to politicians. People who are
political volunteers or who are paid to participate in political
activities, I believe, Ed Meese believes are political hacks.

Morris: But he was a lobbyist himself in the early —

Hall: He was a lobbyist for the District Attorneys' Association.

Morris: And that is nonpartisan politics?

Hall: It is nonpartisan, it is representing lawyers, it is representing
right against wrong, it is pure. It also, unfortunately, gave him
the vantage point of watching all of these politicians maneuver
in Sacramento, which is like watching a bowl of snakes. And so, he
undoubtedly, in my mind, has from early times — and probably around
the kitchen table with his father — has a low opinion of politicians.
He had never been involved in a political campaign until 1980, as
far as I know, really honest to goodness being on the firing line.

Morris: Other than a lawyers committee or with —

Hall: Sure, or consultation on issues and things like that. And the

kind of involvement that the executive secretary had in 1970, as
essentially protecting the governor in his governmental function
from being splashed by the politicians who were out there getting
that governor re-elected.

Morris: But the visibility of the governor is so essential to getting the
governor re-elected.

Hall: But that's PR, and you know from your other research that we were
all proscribed from being involved in the 1970 campaign. We could
not be involved. We could not raise money, we could not do anything.
That campaign is an absolute blank as far as I'm concerned. I don't
remember anything about it.

Morris: That's interesting, because there are other comments that we have
had that it was very difficult to do one's job in the governor's
office in 1970 because the people from the campaign kept coming in
and telling us what to do.

Hall: In the governor's office, which illustrates the difference between

the agencies and departments and the governor's office. Essentially,
we (in the agencies and departments) were outsiders. This is
fundamental structural truth.

Morris: Okay, so what made you accept the offer?

Hall: Well, anyway, I have the opinion [laughs] that Ed really doesn't
like political hacks and politicians, and he saw Gillenwaters in
that role as purely a political animal. Not a lawyer, not a business
regulator , bank regulator , not somebody who would represent the
governor well publicly. Or for that matter, I think that Gillenwaters
and Meese probably had some conflict as far as to what went on in
Washington and whether there was maybe too close a Nixon relationship,
I don't know. I really can't say. But I think there may have been
some question about whether Gillenwaters would be a good team
player. And since I had been out of town they didn't know what a
tough guy I was.

Morris: And you came well recommended.
Hall: Sure.

Morris: So, was it Gordon or was it Ed Meese or was it Governor Reagan that
convinced you to take the job, or your own curiosity?

Hall: I would say it's turned out to be more curiosity than anything else.
And the idea of advancement, participation in the top levels of
government; seeing the whole scene rather than just part of it;
contributing to Governor Reagan. I felt from conversations
with Gordon that the governor had to be shored up in some of his
opinions and his policies, that he was not getting the right kind of
support from staff, that there were battles to be fought. And I
wanted to support him.

There was an offer on the table from Tom Hamilton of Luce,
Forward, Hamilton and Scripps to go back [to San Diego to practice
law].

Morris: Which you'd been with?

Hall: Yes, I had been an associate. I had never been a partner in it, and
he was offering a partnership. And he said he did't know whether
he could keep the door open.

Morris: Did you talk to him about the agency offer?

Hall: Oh, yes. My notes indicate that as soon as I talked to Gordon, I
talked to Tom.

Morris: Did he have any advice?

Hall: Yes. We talked about it. He said to wait and think about it

carefully. He wanted to talk to me. He was basically negative, I
think, because he had done a lot of work inside the firm to try and
set up the partnership. I had been down there on November eleventh
or something like that, prior to the time that the question came
from Meese.

Actually, the first contact was Deaver. Mike was the one, I
think. He was definitely involved, and I think Deaver was also, at
that stage of our friendship, very supportive of my activities.

Morris: In banking?

Hall: In the banking, and just generally. I had known Mike through

Parkinson when Mike stayed in San Diego in '63 or whenever Parky was
chairman (of the Republican State Central Committee) .

Morris: When they were starting the Cal Plan.
Hall: Yes. He and I had gotten along well.

Morris: And you'd stayed in touch with him in the governor's office even
though you were in San Francisco?

Hall: To some extent. Not to a great deal, but I always knew he was
there, and if he had something he wanted done he'd call me and,
you know, just ordinary things. But I think that one of the early
contacts, if it wasn't Luce, it was Deaver.

Morris;
Hall:
Morris:
Hall:

Morris;

Hall:

Morris:

Discussion with Governor Reagan

At what point did you talk to Mr. Reagan about it all?
Only after it was all settled.
I see, okay. [laughs]

That's the way those things basically were handled. He undoubtedly-
and I know this as a fact — he would be presented with the choices.
In this case, he already knew the players, he knew Gillenwaters, he
knew me. It wasn't a matter of, "Who is this fellow, what's he
look like?" and all the rest of it, because we were well acquainted.

I had been to his home — I don't know whether I told you — and
possibly this was part of Gordon's doing, it's hard to say. It was
July of '69 and we put a man on the moon. George Murphy and I had
dinner with the Reagans that night, and we watched the television,
watched the transmission from the moon.* So we were pretty well
acquainted. We'd been off and on, not socially close at all but,
because of the Murphy relationship and all that, he and Nancy knew
who I was. I have wondered whether Gordon didn't kind of nudge in
some direction to set that up to get me more familiar on a casual
standpoint and a social standpoint with the Reagans. I have never
been terribly comfortable — he is not an uncomfortable person to
be with; he puts you at ease. But it's always been there's
been a long distance between his level and my level. In my opinion.

Which is there even while you're being put at ease.

Yes.

That's interesting. That conveys a very specific kind of a — .

*My calendar indicates others were present, including the
Gillenwaterses. J.H.

Hall: So anyway, after it was all settled, he and I talked and he was
very enthusiastic. And off we went.

Morris: Was it in any sense a pep talk? Did he have any specific kinds

of things about Business and Transportation as an agency or how the
cabinet functioned?

Hall: I've got some notes, but I don't know whether it's his briefing or
whether it was my interpretation of what ought to be going on. I
really can't tell. But I've got RR and then a lot of stuff about B
and T and this, that and the other thing. So, I think we had a good
conversation about where he wanted to go.

Morris: And where did he want to go?

Hall: Part of the difficulty in B and T, of course, was the conflict on
the environmental side, and the misunderstanding — He was very
frustrated by the fact that he couldn't get across to people that
he was sensitive about the environment just the way they were.
And he was just always being kicked around for being hard-nosed
by the environmentalists and all the rest of them.

Morris: Did you or he talk with Bob Monagan about this? I remember Monagan
saying something to the effect that that brief span when he was
Speaker of the Assembly, the thing that was most visible to him was
that something needed to be done about environmental protection.*
And I wondered whether the governor also felt that there were
environmental issues that needed support.

Hall: Absolutely. There were environmental issues, but the solution was
different; from not necessarily Monagan 's side, but from the more
liberal side in the legislature. They were very police oriented:
issue orders, stop doing that, stop doing this. And the attitude
of the administration, internally, was to establish incentives to
do the right thing, rather than punishments if you do the wrong
thing .

Morris: The carrot rather than the stick.
Hall: Yes.

*See interview with Robert Monagan in this series.

Personal Staff

Morris:

Hall:

Morris:
Hall:

Okay. Before I ask you any more about that, what did you do about
getting yourself oriented to being a cabinet member, as opposed to
being a department person within an agency?

Well, the biggest blow was that Marc Sandstrom decided to go to
San Diego Federal. [interviewer laughs] Marc was Jim Schmidt's
successor as Gordon's assistant. Marc is now executive vice-
president and general counsel of Great American First Savings Bank,
which is the successor of San Diego Federal. He handled legislation
and a lot of the cabinet side of Gordon's activities, so when he
bailed out, I felt badly.

As a person to support you and tell you —

Yes. I didn't have anybody, basically,
in a civil service position, I think.

CEA?

Bill Scheurmann, who was

That was before CEA categories. He was on the secretary's staff
as legislative assistant. He was a good technician. He had been
on (Senator) Randy Collier's staff, and Bill knew legislative
matters backwards and forwards. It was not convenient to work with
Bill where you got into a quasi-political or philosophical situation;
he was a technician.

Deaver sent over Brian Van Kamp , and I liked Brian. He was
a lawyer, had some experience in urban-housing programs and things
like that, was a Sacramento person, obviously political, and very
bright — lots of smiles, good outside man — so I hired Brian as
assistant. And then I brought Alex Cunningham up from San Diego.
He had been community relations for district eleven for the highway
program.

Had you known him earlier?

I had met him. But Gordon very strongly said, "Anytime you're in
San Diego, be sure to have Alex show you around, because Alex is a
very reliable, good guy, et cetera, et cetera." So it was on Gordon's
recommendation that I first got acquainted with Alex, and then said,
"Why don't you come up to Sacramento and you can be on my staff.
You can handle community relations and public relations?" basically.
So that was the beginning of that relationship, which has been a very
close one. Alex and I, we still communicate.

Morris: Is he still with the agency?

Hall: That's a long story about the battering that he has taken over the
years for having been associated with Ronald Reagan and with me,
because he is a career civil servant. But that's a long story
which we'll talk about at lunch or maybe some other time. He is
now one of the co-chief deputies of the Department of Water Resources
in Sacramento.

Office Space Assignments

Morris: On the business of agency relationships with the governor's office,
you're the first person I've heard mention that there was talk at
one point of moving the agency secretaries' physical offices into
the governor's office complex. Where did that idea surface and why
didn't it happen?

Hall: There apparently was discussion during the Bill Clark period, as
the whole concept of the cabinet was jelling, that perhaps the
agency secretaries should be in the governor's office immediately
available to him. For space and other reasons, it never came off.
It was difficult to figure out where they would be. It was difficult,
I guess, to figure out how to staff it.

Morris: Somebody drew us a map of the layout of the governor's office —
[see next page]

Hall: Said it would have worked, huh?

Morris: No. You're the only person I've heard in talking to a hundred and
twenty-two people about this project who has mentioned this idea.
However, reading some of the literature on tensions between the
governor's office staff and agency people, it occurred to my mind
that one way to resolve that would have been to have you all
physically closer together. You would have worn off some of the
frictions in the day-to-day arguments over the coffee pot.

This little sketch shows about a quarter of the area, which may
be wrong, devoted to legislative bill, bill analysts, kitchen,
various uses, and assistants to legal affairs. Does the space argument
hold up?

Hall: It could have been done. It would have required considerable

reorganization. Beyond these spaces there was also space across the
hall, to the west of the governor's office.

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Hall: I was encouraged in this theory. [Robert] Carleson was the one

who observed, being a good Machiavellian himself, how important it
was to be close physically to the governor if you're going to have
the last word, citing Steve Early in the Kennedy administration,
various other people, who obviously had influence on "the man"
because of their proximity. The other obvious proximity thing was
that the director of Finance was immediately available to the
governor's office. Across the hall to the north was Finance, for
a while. The controller's office eventually went in there, was in
there. But anyway, they didn't have to walk across the park to
get to the governor's office.

It was a matter that was casually talked about, but nobody
ever really pursued it because, obviously [laughs] , the guys on the
governor's staff didn't want the rest of us around. It didn't make
sense for them to push the issue, and it really didn't make sense —
I think Earl Coke, for instance, didn't see any particular advantage,
He enjoyed having his domain separate and apart, where he could
carry on his activities, and that may have been the attitude of the
others, too. We never really pursued this thing very actively. It
was talked about very casually, and I think it was something that
Gordon and I discussed in a very casual way. It was certainly
something that Carleson and I used to talk about, probably [Tom]
McMurray, but it was not something that anybody campaigned for,
as far as I can recall.

Morris: Well, it's interesting to me as an organizational device, since the
whole idea of agency operation was developed to such an extent
during Mr. Reagan's administration. And how it developed, and why
it developed, and why it developed one way rather than another is
curious.

Hall: Well, the formative stages were in '67.

Morris: By the time you got there, Business and Transportation at least,
as an agency, was pretty well operational.

Hall: Oh, very operational. I took a couple of steps to reinforce
authority over Public Works.

Morris: This was before Bob Carleson or after?
Hall: In the process.
Morris: I see, okay. [laughs]

Hall: Jim Moe was the director of Public Works. The —

Hall: Part of the problem in the '60s was the accusation, whether it was
real or not, that the engineers and the highway department drew a
line between point A and point B and built the freeway, and didn't
care what was in between, as far as environmental impacts. The
California Highway Commission was a very powerful organization.
Its executive staff was the head of the Division of Highways, who
was a professional engineer. He was the one who presented the
budget for the highway system to the commission, and it was approved.
The governor's office basically didn't have anything to do with it.

Morris: He had a separate earmarked budget, too.

Hall: Yes. It was all kind of outside of the process. The director of
Public Works was usually looked upon as a political hack, who was
the guy who went out to drink with Randy Collier, and that was that;
not one who had the power. The guy who had the power was the chief
engineer of the Division of Highways, because he was the one who was
going to get it funded on time , and he was going to get it built on
time. His office was on the second floor, a suite of offices. He
had a private elevator to the garage, and it was incongruous, as
.far as I was concerned, that this circumstance existed.

My recollection is that the director of Public Works was on the
first floor across the hall from where Gordon Luce's office was, and
that was Jim Moe. They were modern, well equipped offices, but they
were not wood-paneled and they did not have an elevator to the
beasement. They didn't have the best office in the building, which
was the one where the chief highway engineer was. And I said to
myself, "That doesn't seem right."

I asked Gordon why he didn't do something about it and he said
he didn't want to bother, that it was easier to get from his office
quickly to the governor's office, being on the first floor rather
than the second floor. But then I discovered that in order to carry
on a meeting of more than six or eight people, I had to ask for
permission to use the conference room that was attached to the chief
highway engineer's office, where the Highway Commission usually held
its meetings. So if I wanted to have a meeting, I had to fit into
their schedule. With that combination of factors I offered to trade
offices, and I told Moe that it's going to happen. So, it happened.

I was therefore able to move my staff from scattered locations
into the suite where now the secretary of Business and Transportation
is. So I had conference rooms under my control, I had —

Morris: The elevator.

Hall: The elevator was closed, as a matter of fact. But the symbolism, I
thought, was very necessary, because we were trying to get hold of
the budget. They had succeeded by that time in transferring
authority from the Division of Highways to the director of Public
Works, so that the governor could have some impact on the state
highway system and the budgeting process.*

Morris: How did the state engineer feel about this?

Hall: Badly. And the Highway Commissioner, Vern Cristina, apparently

really took umbrage to this, because essentially what I was doing at
the same time as I was knocking down the Division of Highways , I
was also knocking down the State Highway Commission. And they didn't
like that a bit. Vern, in particular I understand, was very offended.
1 didn't find this out until a long time later, but he always
considered that to be a very crude thing to do, I guess. I thought
it was fun, myself. [interviewer laughs]

Morris: It's amazing how much impact who's got which office has on how
things operate.

Hall: That I somehow knew, so I got the paneled walls. And I was going to
be the governor's representative in that building.

State Computers; Highway Patrol

Morris: There was also something about state computers. [taping interrupted]

Hall: The first impact point on data processing was sometime toward the

end of 1970. This was after [Ed] Reinecke became lieutenant governor,
and there was discussion about new computers and consolidation and
various other things. And I said I didn't know anything about that,
but I do know that the Highway Patrol is at its greatest risk point
immediately after they stop a car. Because they have to have an
immediate response on the license-plate check to know whether they
have just stopped a bank robber, a murderer, et cetera, et cetera.
That's when they get blown away.

So I said I don't care what you do, you simply tell me and
guarantee to me that we have whatever the right number of seconds turn
around is, I think it was a thirty-second turn-around on one of

See also interview in this series with Robert Carleson.

Hall: these inquiries. That was the only thing I cared about. If you
cannot guarantee that to me, don't change what we have. Because
that's what we have right now. If you can't say that this is going
to work that way [laughs], we don't have anything to talk about.

Morris: This was the existing computer system that Business and Transportation
had.

Hall: Well, the Highway Patrol, however, they were coordinating. I really
didn't know what the system was or what they were doing, all I knew
was the criterion that I got from the Highway Patrol, and by that
time I had been to some funerals. So it was very much in my mind
that I didn't want to have anybody lost just because somebody wanted
to save some money to buy a new computer. That was the criterion.
And everybody kept trying to talk me out of that.

Now, from that starting point it carried over into the following
two years, I think, and was still going by the time I left. They
were still talking about how to consolidate the computers, and by
that time we had all learned more about the marketing system of IBM
and Univac and all the rest of them, and how important it was to
these organizations to get this contract.

Morris: Ah. To have a single system to service the whole state government
would have been a plum.

Hall: Well, the money involved was tremendous. And I was naive, I guess;
I didn't realize the lengths that these people would go to win.
They're rough, and they're not exactly straightforward, and there
was a lot of controversy. Every once in a while we'd get a whiff
that somebody was being improperly influenced, and we'd try to track
those things down.

Environmental Issues; Mutual Aid and Security

Morris: Did this produce any continuing contact with the lieutenant governor's
office, or was that just sort of incidental?

Hall: He had the assignment. That's the problem of a lieutenant governor's
office, what are you going to do with them? So every once in a while
they'd give Reinecke something to do. The other thing that they gave
him to do was environmental coordination. Ford Ford (Deputy Secretary
of Resources) and I used to tear our hair about that, because we
could never get anything through the process.

Morris: And it kind of complicated Ike's [Livennore] job as head of
Resources.

Hall: Oh, sure. Ike felt that he didn't need that kind of help, basically.
I was playing in a defensive game, because the environmentalists
were becoming very aggressive. I was trying to protect the free-
market-incentive solution to these things, and also not impose state
regulation on local government, things like that. We all had our
agendas. I felt that Ike was always delightful to work with and he
always won [laughs], because he is such a convincing and also such
a stubborn guy, but also so pleasant in the whole process. He and
Reagan always got along famously, I thought.

Morris: On the Highway Patrol, did your oversight of it involve you in the
Criminal Justice Task Force effort to draw the Highway Patrol into
some of the mutual-aid planning?

Hall: No. Operationally, Meese was in control of the Highway Patrol. My

relationship with the Highway Patrol was administrative and budgetary,
But I never felt it appropriate to get involved with any of their
operational stuff. About the closest I came was to look at their
special-assignment system — special assignments meaning picking up
legislators at the airport and driving them wherever they wanted to
go — which is a lobbying process. It's the same thing that happens
with military organizations in Washington. They make themselves
very popular on Capitol Hill by this means — or they used to. They
can't do it so much now, but they used to provide airplanes and all
kinds of things to congressmen; that's the way they get their
budgets approved. It's a not-so-subtle form of lobbying.

I was curious about that because I always wanted to have the
final say on the budget, if I could. We required the Highway Patrol
to follow through as far as the governor's directives on budget
matters, and I didn't want any backdoor lobbying going on. So we
watched from that standpoint, but operationally as far as Highway
Patrol assignments that came through mutual aid or other things,
that was all governor's office. That was Meese and I guess [Herbert]
Ellingwood, whoever had the legal affairs position.

Morris: Did the mutual-aid planning and implementation as it went along come
through the cabinet at all?

Hall: No, not at all.

Morris: Even when there were questions later on about the governor's safety?
I gather there were some threats and things like that.

Hall: There were probably threats all the time, but that was strictly
governor's staff. We were all briefed as far as our personal
safety. You know, when I was in Human Relations, we had a bomb at
Corrections on one occasion; blew out a restroom. And we were all
given the security briefings as far as car safety, car bombs, stuff
like that. We were all warned. There was a lot of that going on
in those days; we don't remember it much now.

Morris: Was much of it serious, or was it more unrelated crazies, as they
say?

Hall: How do you make that distinction? If the bomb goes off, I don't
care who did it. So whether it was coordinated, uncoordinated,
whether it was political, whether it was personal, really doesn't
matter. If you get a leg blown off, you remember the event.
Particularly in Human Relations, where we were allegedly cutting
welfare, where we were constantly being berated publicly for all
kinds of things, putting sticks in the spokes of wheelchairs and
such; and with all the criminal- justice side, corrections, with
George Jackson and all of that in August of '71, people were getting
killed. So we took it seriously.

Morris: Were any of them threats to you yourself?

Hall: I don't remember any, no. It's more of my low profile. [laughs]

Economy Moves; Community Development; Problem at Savings and Loan

Morris: You mentioned that there were some early tussles with the Department

of Finance during your tenure as secretary of Business and Transportation.

Hall: Hell, when I started out as superintendent of banks! See, I was
separately funded. The State Banking Fund is an assessment fund
against the banks, so it really didn't have anything to do with the
state budget. Recognizing the symbolism and the requirement of
economy in government, we would go through various economy steps
within the state banking department. For instance, I immediately got
rid of the state car that was the superintendent's car. I figured
I could deduct whatever legitimate business expenses I needed to,
and it was not necessary for the state to provide me a car for my
personal use, since it essentially was not appropriate to commute
back and forth to work in a state car. So I got rid of the car; it
was a broken-down Dodge anyway and I didn't like it. But that bit
of symbolism went unnoticed [laughs] , which was an early lesson. I

Hall:

Morris:

Hall:

Morris:

Hall:

Morris:

didn't get any credit at all. As a matter of fact, I think
everybody figured it was showboating, and they wanted to keep
their cars.

It was a constant offer of mine in the cabinet that if everybody
else would put their keys on the table, I would put my keys on the
table and we would get rid of our cars.

Did you have any takers?
Of course not.

Did the cars come with drivers?

Only if you wanted them to, and then they would. I did not.

The cabinet had the same perquisite that the legislature does, they
can order their own cars?

Hall: No, it was more closely controlled.

In B and T, I got a Highway Patrol car, except it was a plain
plate car, but it had all of the horsepower. [laughs] I think
I've driven faster in that car than any other car I've ever had.
I used to roar down to the Bay Area, really put some miles on it.

Morris: You had Housing and Community Development under your wing; was that
a new department at that time?

Hall: It was existing under Luce. New as far as state government, I don't
know exactly where it came from. I doubt if it's something that
we would have created. It was probably a combination of something
else that they didn't know what to do with so they put it in there.

Morris: Or their response to things like Model Cities and other federal
programs?

Hall: But that followed; Model Cities was plugged into that. That was
about the most activity that occurred.

Morris: It sounds like it wasn't a major concern of yours.

Hall: No. I didn't feel that they had any programs that were really

useful from the state level. I really can't remember what they did.
They got involved in Model Cities, which was not a practical
program, and in long perspective now didn't really get much
accomplished. It was intended to be a demonstration of how you could

Hall: improve the cities' construction methods and new methods and all the
rest of it. It was, I think, something that probably created
false expectations on what the building industry might do, because
you'd run into the practicalities of the market immediately. My
recollection is foggy because I really didn't put much thought to
it.

Morris: Did you by and large follow Gordon Luce's approach of letting the
departments pretty much run their own show and things like that?

Hall: Very much so. That's the way I liked it when I was superintendent

of banks. When I got into the other position that's the way I tried
to maintain it. There were a few occasions where issues such as
problems in the Department of Savings and Loan got to the point
where I had to get directly into negotiations with various parties
to keep a situation in balance.

There was a savings and loan failure or some big problem, and
Mike McBann was having some kind of controversy by that time with
Preston Martin, who was by that time Federal Home Loan Bank Board
chairman — had previously been commissioner of Savings and Loan in
California when I was superintendent — so I knew all the parties.
Eric Stattin was the chief examiner for Pres and had been his chief
deputy in California, so I knew everybody who was involved.

The feds were taking one position and McBann was being definite

on his side that he wasn't going to do what the feds wanted him to

do. I mediated that; but that was the kind of thing that I would

get involved in: where it was beyond the jurisdiction of a single

department, where there was coordination required, where it was

necessary to carry a matter to cabinet for presentation and it was

not of sufficient importance to take a full presentation by the
department director.

VI CABINET PROCESS: POLICY DECISION AND COMMUNICATION

Morris: What kinds of things would you take to the cabinet?

Hall: That's a hard one. In Business and Transportation, the most difficult
situation that we had during that year was the Southern Crossing
of San Francisco Bay. It was a political problem; it was an
engineering problem, lots of transportation impacts involved. It
was competition with BART; they fought it because they felt it was
going to take away their traffic. All kinds of things. We finally
figured out that there had to be a referendum of sorts.

I can't remember how all these things came about, but we
finally were either put in a position or the governor decided he was
going to get into a position of following the dictates of the people.
So when the Bay Area people turned it down, they stopped the
bridge. Whether that was good, I don't know. Maybe when t*he Bay
Bridge collapses we'll find out. Maybe it's good that Oakland be
separated from San Francisco.

Morris: Well, I don't know if it qualified as a Southern Crossing but there
is a San Mateo Bridge now, and the Dumbarton Bridge has been
rebuilt.

Hall: Doesn't qualify, because the Southern Crossing would have hit

somewhere around Hunter's Point, just south of there some place.

Mroris: Was Jim Crumpacker still the cabinet secrerary when you came aboard?
Hall: Yes.

Morris: And how was he to work with in taking things that needed to go to
the cabinet or that you wanted to go to the cabinet?

Hall: [pauses] Sometimes difficult. I guess I probably felt strongly

about it in those days, but I can't feel much emotion about it now.
I think there was a normal amount of friction.

Morris: In the fact that he had veto power over what was going to —

Hall: He didn't have veto power, that was fairly clear, but there was

certainly hesitation power and there was agenda arrangement, things
like that. But I think, in proper perspective, he was doing his
job. He may not have done it as smoothly and as cordially as it
could have been done, but he was getting his job done. I probably
said a whole lot of different things in those days, because sometimes
there is a lot of maneuvering going on to get the priorities in the
right order. And everybody had their own agenda, I guess. I can't
think of anything specifically right now that represented a big
demonstration of a conflict along these lines.

Morris: Well, it looks like riding herd on this array of agencies would be
a full-time responsibility, and then you've got the other
responsibility of sitting in the cabinet meetings and advising on
what the other agencies are doing.

Hall: That's correct, and the time occupied in doing that was horrendous.
You'd have at least two cabinet meetings a week, you'd have staff
meetings.

Morris: Staff meetings with the governor's staff?

Hall: Yes.

Morris: Preparatory to —

Hall: Yes, or special-issue meetings with the staff, but also very often
you'd have press-briefing sessions.* Then you'd have the usual
Chamber of Commerce stuff that you had to do all the time which was
to greet groups in the governor's office: come in, talk to them
about what your agency does; and you'd have the Young Presidents
Organization and the Chamber of Commerce, visiting groups all the
time. Then you had your own departmental constituencies and speaking
engagements all the time, from the bankers or the housing guys or
one thing or another.

Morris: Those constituencies look like they were probably pretty important
to Mr. Reagan.

*Preceding a Reagan press conference.

Hall: Yes. It was not looked upon as a political activity, it was a

governmental activity of communication: they want to know what our
programs are, we tell them what our programs are. They want to
know what are we planning in the future, we try and tell them what
are our policies. That's of business interest to them. And
primarily on the Business and Transportation side, it was a business
constituency of some sort, whether in the transportation business
or in the building business or the financial institutions.

Morris: Ike Livermore commented that he sometimes felt a bit at sea being
asked to render an opinion on issues brought up by some of the
other agencies.* Did you have that kind of feeling on occasion?

Hall: My tendency was to go along with the expertise of whoever the

proponent was, so long as their story hung together. [interviewer
laughs] If after a few questions you began to feel that they were
missing the boat from a philosophical or policy standpoint, or
creating a situation that would reflect badly on the administration,
then you would express an opinion. It didn't bother me to carry out
that function —

Hall: — and this is perhaps the difference between Ike's experience as
a corporate executive on the financial side and my experience as
a lawyer. Because as a business lawyer I am constantly confronted
with new fact situations that I have to think about and ask myself,
"Am I getting all the information I need, or is the governor hearing
all the information he needs in order to reach a logical conclusion,
or is there something missing in this picture?" I may never have
seen a picture of a cow before, but in general I know what
quadripeds are supposed to be equipped with, and if there are only
three legs I say, "I think there's something wrong with this
picture." I think it's part of the legal training, where you're not
concerned with being confronted with a technology or an issue that
is not something that you've encountered before, because that's the
nature of the legal business. You're constantly encountering things
that are new, so that's part of the game.

Morris: It sounds like you were looking for consistency in the kinds of
decisions the cabinet was coming up with.

Hall: Very much so, and my constant and desperate struggle was to make
sure that the governor was informed fully before he reached a
decision. That's the most difficult part about his job. He's got

*See interview with Norman B. Livermore, Jr., in this series.

to make decisions, but for goodness sakes let's make them on facts
and not just somebody's wild-assed opinion about what might happen
someday. Let's get some evidence, let's get some facts, let's get
some data, let's make sure we know what we're talking about.

From my perspective, it looked like there were tons of issue memos
and backup reports. What kinds of information would be left out in
questions that were coming to him for a decision?

In their original form, practically every issue memo that came out
of a department was a propaganda document. It was a selling piece.
They wanted something to happen, they wanted the governor to agree
totally with what they wanted to have occur. Whether it was coming
out of Corrections or Public Works, or wherever it was coming from,
it was a sales piece, which most of the time left out or downplayed
the negatives of the decision. So we'd throw them back, redo it,
talk about this, this and this. And that was the checkpoint of
the agency office.

If you were doing your job right, you were forcing those
department directors to think objectively about what it was that
they were recommending the governor do. That was a big part of the
job. And that's why staff guys like McMurray in particular, who
was my program analyst eventually [in Human Relations], were
absolutely necessary. They were indoctrinated properly with the
philosophy and attitudes of the governor and knew what to watch out
for. Whether it was big spending programs, whether the department
was saying, "This will only cost five million dollars," but we all
know it's going to expand way beyond that and the department's not
telling us that. We'd go back and we'd tell them, "Get your facts
straight. Tell us the whole story."

And would they be forthcoming at that point?

Not necessarily. Some of them would constantly play games, and
you would get after them and yell at them and do a lot of things, and
also never pass on the document until you were satisfied that they
were telling the whole story. That was your control, because the
cardinal rule was that if they ever went around you to the
governor's staff or to the governor, they were dead.

Now, some of them worked a game. I think the worst offender
was probably Earl Brian. Carleson did it, but he did it smoothly.
It was one of these proximity thing: he would happen to be
circulating through the governor's office and someone would ask
him a question. He was not as aggressive as Earl was. Earl would
go in and tell 'em, and I tolerated that.

Morris: Earl Brian is reported to have had some kind of special access to
Governor Reagan, some kind of connection that other people didn't
have.

Hall: Earl was close to Ned (Hutchinson) . He made it his business to get
close to a lot of other people: Helene von Damm, others. He made
it his business to advise the governor on his health and provide
pills and stuff. And Reagan went right along with him. He was
asking Earl, "What do we do about this and that?", so Earl was
practicing medicine.

Morris: Well, the sense you get, too, is that Reagan enjoyed the contact
with a lot of these bright young men who were around.

Hall: I think that's true.

Morris: That the very fact that you were all full of beans and had strong
ideas about how to remake the world maybe appealed to him.

Hall: I think that as a group it was a pretty respectable crowd of people,
even though we did not flaunt academic credentials or intellectual
credentials. We all had a certain point of view and a certain
grounding for that point of view out of our own experiences, whether
they were academic experiences or real experiences. We never posed
as intellectuals or gurus or super-intelleigent people, but on the
other hand there was a lot of common sense , and we all knew who we
were working for. We were not there for personal agendas, as far
as I could tell. I didn't run into very many people, if any. Earl
eventually developed his own personal agenda, but most of the people
were there to get the job done, and the job was to carry out the
Reagan philosophy, as he interpreted it.

Most of the controversy that went on was that we weren't
getting close enough to the mark that Reagan wanted made. That
certainly — that memo* — was exactly the thrust of all of that
turmoil. My sniping at everybody — Meese and the rest of them —
as far as priorities was to increase the effectiveness of carrying
out the Reagan philosophy. My total frustration in accomplishing
that was what finally told me I ought to get out of here, because
it wasn't getting anyplace. Unfortunately, I think, on the other
side of that coin, my activities were being interpreted as a personal
agenda; that I wanted to have Meese 's job, that I wanted to run things,
that if I didn't get my own way then I was unhappy, things like that.

*Memo to Ed Meese dated November 9, 1971, "Development of Reagan
Administration Priorities." See appendix.

Morris: How did that develop? Did you and Meese have difficulty or
disagreements on specific issues?

Hall: It's an outgrowth of the tension system between the governor's

personal staff and the agencies. I was assured from the beginning
that everybody in the cabinet was equal except the governor;
everybody at that table had equal powers.

Morris: Agency people and staff people.

Hall: Yes, but the only staff person at the table was Ed Meese. He was
the member of the cabinet as the executive secretary; the cabinet
secretary was not a member of the cabinet.

Morris: Nor the people sitting around behind the chairs.

Hall: Nor the people around the room. They were the governor's personal
staff; they worked for Ed Meese. That's his agency, the governor's
personal staff. My agency is Business and Transportation, Ike's
is Resources, et cetera. So when my people, my subordinates from
my staff, came in contact with governor's staff people, as far as I
was concerned they were equal, given appropriate rank status. And
I did not expect the governor's staff people to be issuing orders to
me or to my people without proper protocol.

Morris: And that happened?

Hall: Constantly. It was a constant problem of getting polite communication
going between my people, particularly in Human Relations, and the
governor's staff. They were simply rude, and I don't like that [laughs],
I really don't. And I wouldn't stand for it. And I would let them
know that I wouldn't stand for it.

They were doing it in the same way that the Nixon guys did it.
The Nixon guys would call up and say, "The president wants so and
so." And we would all know that it wasn't the president that
wanted it , it was John Ehrlichman or it was Haldeman or somebody
else. And we'd say, "Bullshit! It's not the president, it's you
guys, and we're not going to do it. If the president wants it done,
have him call the governor." All this crap all the time.

The same attitude pervades the staff of anybody in high
position; they all take on the mantle of the man and they start
throwing their weight around. And I resent that, I don't stand for
it. If the man in authority wants it done, he will so communicate
it in a way that we will all understand that he wants it done.

Morris: Particularly when you're meeting twice a week with the governor.
Hall: Of course. Don't kid us.

Morris: Following the bright young man theory, how did you guys relate to
Earl Coke and the Agriculture and Service agencies , since he had
been around a long time, in and out of government?

Hall: I think there was a generation gap that worked in both directions.
I think Earl very properly looked at us as bright but certainly
inexperienced people. He had been around Bank of America and
government and lots of other places, and he knew how these things
were supposed to work and [laughs] why did we ever question his
judgment? There were plenty of things to question. We all had
different ways of doing things from a personnel standpoint and from
an organizational standpoint.

I was definitely on the simplistic side as far as organization.
I didn't want a big staff, I didn't want the car. A lot of these
things — I was a populist, I guess, ana I didn't appreciate the
fact that some of these trappings of office are necessary in order
to carry out the mission.

Morris: To establish your credibility and credentials.

Hall: Absolutely. I now know that you've got to have a certain amount of
expert staff. You've got to have certain accompanying ruffles and
flourishes when you show up on the scene, otherwise people don't pay
any attention. And when you want to go back and issue some orders
then you have to crack them in the side of the head to tell them
that you are the governor's representative and you do have his
authority.

So, Earl [Coke] operated along some lines and we operated along
others, and there was friction. I called him on a changed vote one
time, which I shouldn't have done.

Morris: He changed his vote in a — ?

Hall: Yes. This was an outgrowth of [laughs] one of Reinecke's famous
environmental committee things, where we had gotten together and
forced Ed to a conclusion of some sort, and we had all agreed that
this was the position that would be presented to the governor.
And when we got to the cabinet meeting, after some debate — apparently
from staff or somebody — there was a vote and Earl went the other
way.

Morris: Even though he'd been talked to beforehand.

Hall: Sure, even though we all thought we had an agreement. So I made
some comment about that, which I shouldn't have done.

Morris: In the cabinet meeting.

Hall: Yes, I brought him down. I said, "Well governor, it appears that
[laughs] we've had a change here, and it's unfortunate." And then
Earl unfortunately also responded at the time, so it was one of
those situations we didn't like to impose on the governor, because
he didn't know what to say. It was an awkward situation.

Morris: Yes. Did I hear you correctly that there was a thought that Ed
Meese had avoided making a decision — ?

Hall: No, this was Ed Reinecke.

Morris: I see.

Hall: In one of these environmental discussion groups, or whatever it was.

Morris: Did Reinecke normally attend cabinet meetings?

Hall: Quite often, yes.

Morris: How about the input from the rest of the constitutional officers?

Hall: [Houston] Flournoy would come on occasion. Ivy [Baker Priest]
less frequently.

Morris: How about Max Rafferty?

Hall: Never.

Morris: Was he considered part of the — ?

Hall: No. Rafferty was gone by the time I came into the cabinet.

Morris: Wasn't Wilson Riles elected in 1970?

Hall: Well, Rafferty was out running for Senate then. In any event, I
don't ever recall him coming to a cabinet meeting.

[lunch break]

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VII HUMAN RELATIONS AGENCY, 1971-1972

Welfare Reform Background

Morris: Sitting on the cabinet as B and T secretary would have put you on
the scene when the discussion was health and welfare. Did you
develop some ideas about the welfare question?

Hall: Let me give you a quick sequence of what happened.

Welfare was always an issue, from '66 on. The Medicaid
program was just getting started and was beginning to balloon.
By the time I hit the cabinet in 1970 it was a serious problem, out
of control.* Nixon was grappling, groping you might say, with the
situation. Everybody has always been in favor of welfare reform from
Elizabethan times, and always will be. It is always with us as
are the poor. There's never been anyone against welfare reform
that I know of, it's just how are we going to do it?

In the spring of '70 Crumpacker; Bob Martin, who was director
of Social Welfare; [Lucian] Vandegrift; and all of the Human Relations
guys responded to a cabinet or maybe governor's staff requirement
that they come up with some measures to get the welfare cost under
control. Now I include Crumpacker, and I'm not quite sure why,
except he seemed to be the coordinator of this effort from the
governor's staff standpoint. And I'm sure Finance was involved in
some manner, but I'm not quite sure how they were involved.

They came up with something in June or May which was a series
of actions that they were going to take. It was in an orange
binder; that was the "orange book" which we all got. We all thumbed

*A memo in my files indicates that I was following the welfare
situation as early as 1969. J.H.

Hall: through and said, "Gee, that's going to save a lot of money."

Nobody noticed that we were taking away the wheelchairs and a few
other things.

Morris: Specifically?

Hall: Almost specifically. As I recall it, in the end of May it must

have been approved. By the middle of June the paraplegics were on
television down here weeping, editorials all over the state. The
governor had to apologize. It was a very difficult time. It was
similar to our present situation with the visit to the cemetery
in Germany [Reagan's May 1985 trip to Bitburg] . It was terrible.
And, of course, those of us who were not directly involved, we would
just go along with the act. We didn't really know anything about
it, B and T and Resources and such. Vandegrift did not respond
particularly well to the situation. He obviously had not perceived
the ramifications of the actions that were coming out of Social
Welfare.

Let me describe the people first of all. Bob Martin was a
DA's assistant, a public prosecutor. Vandegrift was a public
prosecutor. Ed Meese [laughs] was a public prosecutor. There
wasn't anybody in the act who was saying, "Wait a minute. From a
program standpoint, what is going to be the impact of this thing?"

Morris: Did Michael Deaver play a role in this?
Hall: I don't know.

Morris: He would seem to me the person that would have made it his

responsibility, if nobody else was, to think about the implications
of some of it.

Hall: If he had a role, he blew it.

Morris: Yes, but this wasn't his kind of a role?

Hall: No. That's why I think Crumpacker was directly involved. I think
it had been assigned for oversight to him.

Morris: Was Rus Walton still around?

Hall: I don't think so. So, it was a situation where they went for an

overkill solution and it really blew up in their faces. McMurray
was on the governor's staff at that time.

Morris: On special projects?

Hall: Yes. He was the guy who, if they wanted a chart, he'd figure out
how to make a chart. But he was good, he knew what he was talking
about. He was watching the budget all the time, he knew legislation,
he was quite effective. Tom would wander across the street
occasionally and talk to me in my office in B and T, so we got well
acquainted. I am, despite our present relationship [in this
interview] , really a very good listener, and as a result I would
sit and listen to him talk about what was going on across the street.
And I was in the same relationship with Carleson, who made it his
business — and I had been warned by Gordon Luce and Marc Sandstrom,
"Don't let Carleson waste your time. He will be in here every
afternoon at five minutes after five standing in front of your
desk talking. Throw him out, because he'll stand there as long as
you let him talk."

Morris: Because he's so wound up about what he's doing, or he sees other —

Hall: That was the appearance. It was a very studied activity on Bob's
part. Bob is a hell of a politician, and his way of getting to
'know you is coming in and talking at you; and sooner or later you're
either going to say, "Get out" or "Sit down," one or the other.
Well, I'd let him stand there most of the time, but I would listen
to him. I would respond, and sooner or later he's finding out where
the pathway is. His role, assigned by Moe, was to find out what I
was all about.

Morris: As the new boss.

Hall: That's right.

Morris: I see. Oh, that's wonderful.

Hall: Sure. And so he did that.

I also had my own web that I was weaving, because I had to find
out what they were doing, too, so it was a communications system.
Through that process we would talk about the problems of government
and various things, about welfare, et cetera, et cetera.

Morris: On beyond the immediate agency.

Hall: Of course, because you had to talk.

Morris: And there was only so much you could say about Public Works.

Hall: Yes, and he didn't want to appear to be in there carrying a

particular brief for a particular item on our internal agenda.

Morris: Does this mean you had an open door kind of policy, that anybody
from the agency —

Hall: Basically. And, at five minutes after five you don't have to go
through the secretary any more, you can just walk in. So, Bob
would come in — we got well acquainted that way — and Tom McMurray
would show up, pacing around, worrying; he was the best worrier I've
ever known. So I'd get a lot of gossip that way and find out what
was going on. That was a good communication system.

When everything blew up on the orange book, then it was a
shambles for several weeks. Nobody knew what to do. Vandegrift
and Bob Martin had done what they thought they had been told to do;
they had found out that they didn't know what they were doing,
basically. And there was a lot of sabotage involved in this.
Martin, as Reagan's guy in Social Welfare, had failed to penetrate
that organization.

Morris: He was getting sabotaged by the department staff?

Hall: Sure, who set him up. He said, "We've got to save so much money,"

and they said, "I know how to save some money." So they marched him
over a cliff.

Morris: But in this case there wasn't the kind of control from the governor's
office that was causing restiveness in other quarters.

Hall: Control in what manner?

Morris: Control in the sense of the governor's office knowing everything
that was going on.

Halll : Oh, rarely did the governor's office know everything that was going
on. See, even in the case where they had direct authority and
operational management of OEO, they still didn't understand what
they were grappling with, because they were too busy. It was
impossible for them to effectively serve the governor as his personal
staff and also get involved in operational things. That's why the
agency system was theoretically effective.

Welfare Reform and Education Task Forces, August 1970

Hall: The time came to regroup. A lot of that regrouping occurred

between Reagan, Meese, I don't know how much Deaver had to do with
it, and Tom McMurray. It was Meese and McMurray as far as I know

Hall: who drew the "Number One Priority" memorandum, which was two-pronged,
as you may recall. It was not only welfare reform, it was also a
reform of the educational system. That presentation was made in
early August, when he got us all together and said, "Gentlemen,
we've got to do things." He had the charts that Tom McMurray made
and he personally conducted the meeting , which is something he
rarely did. He said. "This is going to be the priority," and asked
for the contribution of people to the — well, particularly on the
welfare side — the welfare reform task force.

Morrris: Each of you had to come up with somebody for each task force.

Hall: Yes. My guy was Carleson, because we had been talking about these
things, and I knew that he was a good public administrator.

Morris: And that he'd given some thought to the welfare situation.

Hall: Some. So I contributed him. He then drew on Public Works, got

Ron Zumbrun and Jack Svahn — who is now in the White House, and Carl
Williams, who was another administrative analyst in Public Works.

Morris: Who did you contribute to the education task force?

Hall: It was not possible to contribute to education, and that's where
the whole thing got off the track. It was immediately derailed,
because it went to Finance.

Morris: Why did it go to Finance?

Hall: On the theory that Finance had the responsibility over education

budgets, and therefore they were the proper agency to take care of
things. It was a disaster. Worse than that it was a zero, it was
a cipher. And nothing ever happened.

Morris: Just because it was in Finance, or because of the fact that you've
got the Department of Education with its own elected head?

Hall: The elected head had absolutely nothing to do with it; Wilson Riles

was not invited into this meeting. Alex Sherriffs was the governor's
education agent on his staff. Alex was the guy who went to all the
meetings and interfaced with the educators.

Hall: He came from Berkeley. He and Meese had cooperated during the student
activity there. And Alex was a very funny guy. He was a super guy,
but not action-oriented, and he was not in an action position; he
was personal staff. He did not have any kind of operational brief

Hall: or authority. He was strictly a communicator and an interfacer, so
he always was very frustrated by this situation. We used to talk
about it.

Morris: By the education task force?

Hall: No, by the whole situation. He recognized where there were a lot
of problems in the system, but it was essentially impossible to
break the grip of Finance on the educational side, because it was
looked upon not as an operational activity of the executive branch.
It was almost totally independent. Our only interface was through
the budget and through the governor's position on the Board of
Regents of the University of California. But all of this was only
vaguely related to the operations of the executive branch of government.

Somehow, the interface had to be Finance. Now, McMurray and
I were just jumping up and down, because the reason that the item
was in the memorandum I'm sure was because Tom, when he drafted the
thing, he and Meese talked about it. They realized that they had
to get a handle on this thing, but it just kind of rolled off the
table.

Morris: Even though the Director of Finance, Verne Orr, was a member of the
governor's team.

Hall: Yes.

Morris: He could see no way to get Finance going in the direction that
would tie in with the governor's priorities?

Hall: I think Verne believed, because he believed his staff, that they
were doing everything they could. He assigned Jim Dwight — Jim
Dwight was the deputy director of Finance. Jim is a very good
accountant, but is not creative. The only time I've ever seen
Ed Meese really get mad, visibly, was when he and Dwight and I were
talking about a budget matter one time. We were at the blackboard,
we were going through numbers, and Ed was trying to get Jim to
understand a hypothetical number, and Jim kept saying, "But that's
not the right number, the right number is so and so." [interviewer
laughs] And Ed calmly three or four times tried to get him to
understand that we were talking in hypothetical terms; couldn't get
him to switch. And he was livid, he was shouting. [laughs] The
only time I've ever seen Meese shout at anybody was on that occasion;
it was really funny.

Hall: So Dwight , excellent accountant type, but when it came to

conceptualizing program and things like he had some limitations. He
was put in charge of the education task force. It never did produce
a product that I know of, it just never went anywhere.

Morris: And Ned Hutchinson had a role in that education task force.

Hall: No. Ned was the head of the welfare reform task force. I don't
know that he was on the other one.

Morris: You're right. Sorry.

Hall: Ned was the head guy for welfare reform, for the task force. He

was the chairman of the task force. I gave him Carleson and company.
Earl [Coke] gave him Jerry Fielder. Ike came up with Mayfield. I
can't remember who there was from the Human Relations side.

Morris: I think Mr. Carleson said there wasn't anybody from Human Relations
on purpose, because it was their agency.

Hall: I think that's probably so. Anyway, that record's all written down
carefully.

At the outset we had seen it coming. I give Tom McMurray as
much credit as anybody in getting this thing rolling. And then he
would constantly come over and tell me what was going on, as would
Carleson. From the time of the establishment of the task force, we
wanted to make sure this thing went in the right direction, so there
was a communications activity that was going on with me that was
not going on with anybody else. And I was, to the extent that I
could help them, either by advice or providing resources, I was more
than willing to do that. Because I felt it was fundamentally important
to the governor from a public-policy standpoint and from a political
standpoint to succeed. He had to get this thing under control.

Morris: From a cost-containment point of view?

Hall: All of those things. The impact on society of a program that

appeared to be doing one thing and was actually doing something else
to society, undermining society. The whole process.

Morris: What did Mr. Vandegrift do during this period?

Hall: Stayed quiet and was not happy with the situation. He knew that he
was in the doghouse.

Morris: Did he have any suggestions for remedying the — ?

Hall:

Morris;

Hall:

Morris:

Hall:

Morris:

Hall:

Sure. His assigned role at that time was to cooperate with the task
force and to open doors and help and all those things. Presumably
they came up with ideas and cooperative things out of his staff.
I don't really know, because I was never in the detail of this thing.
This was operational level.

Throughout the fall I was getting reports from McMurray and
Bob, and Bob was very concerned because the task force structure was
not being coalesced at the Hutchison level; it was not going
together.

Well, Hutchison still had to do his appointments responsibility and
all of that.

Of course, except somebody else [Ronald Reagan] had said, "This is
the number one priority." You're supposed to do that kind of thing.
[laughs] That's what really bugged us. We were concerned that the
whole thing was just going to get into a slide and fade away.

This had not been publicly announced, had it? Until the report was
prepared and the legislation was ready, wasn't the fact that the
task force was going on not hidden, but just not —

It was not publicized, as far as I can recall. Certainly, no big
targets were set up or anything like that. See, we'd already been
burned once with the idea that we were going to publicize a reform,
which blew up. So it was a natural reaction not to go out and toot
the horn.

Was the cabinet quart erbacking?
the cabinet?

Did the progress reports come to

As far as I recall, there were some but they were vague. There was
a presentation midway in the fall which Bob and others participated
in about possible savings and this, that and the other thing.
Finance was always defensive. They, being the leading spokesmen on
the financial side, traditionally have wanted to be right; they
didn't want to get caught with bad numbers. We were in a budget
squeeze.

The task force was beginning to talk in terms of large savings
being available. Finance was skeptical; this was a permanent
condition throughout the whole process. They were constantly
undermining — not intentionally, but from their own mindset — they
were always questioning the validity of the numbers, to the point
that when we got in front of legislative committees it was always
easy for [William] Bagley or [John] Burton to turn to the guy from

Hall: Finance and say, "Now, do you agree with that number that Mr. Carleson
has just told us?" And the Finance guy would squirm and grovel and
do all kinds of things. Sometimes it got so bad that they would say
the number is no good, or they cannot support the number.

That was the fundamental friction that was going on between
us on the welfare reform side and Finance in general.

Morris: And Verne Orr presumably backing up his people.

Hall: It was bloody, just very bloody. But we're getting ahead of the
story.

Hall Replaces Lucian Vandegrift as Agency Secretary; Relative
Merits of Business and Transportation

Hall: In any event by late November, early December, we knew essentially
what was going to happen. We knew that Vandegrift was going to go
away. Ed asked me to do the Human Relations job.

Morris: Were there other things about Vandegrift than the fact that he'd
been responsible for this gaffe, or was that sufficient to bring
about his demise?

Hall: No. He had been the assistant to Spencer Williams and was always
kind of looked upon as the assistant. He was acting secretary, so
he had not come in as the fully endowed secretary.

Morris: He hadn't established his own control or identity in relation to
the agency?

Hall: That, plus the fact that his awareness of the real politics of
social welfare and those structures, the apparatus of social
welfare — He never did understand. He just didn't know what hit
him, that's all, and as a result this was recognized by the staff
and apparently by the governor. He ended up as a superior court judge.

Then I was told that I had to do this, or I should do it, and
I'd be performing a service and I'd —

Morris: Because everyone at this point at that level knew that you were in
consultation with Carleson and McMurray?

Hall: Yes, and I'm sure that McMurray was over there plowing the field in
the governor's office making sure that everybody knew that I was
really interested in the subject matter and was on top of it,
et cetera, et cetera, et cetera. I'm sure Tom —

Morris: You were set up for the job.

Hall: Sure. I was being manipulated by Tom McMurray, basically, but I

was going along with the game, too. I didn't see any reason not to
do it, I guess. If I had thought, "What am I giving up?", I probably
would have stayed at B and T.

Morris: Because B and T was a satisfying job?

Hall: Not necessarily satisfying, but it was fun, it was constructive.

We got to play with all the big transportation systems, talk about
high speed rail — it wasn't even rail, it was magnetic propulsion —
from LAX to Palmdale. We had a big project going on that for a while
until we found out how much it cost. [interviewer laughs] My
greatest enthusiasm was trying to figure out a practical way to
provide a transit system from Los Angeles, via utilization of the
river channels and various other rights of way that are available
right now in Los Angeles.

Morris: Except for the rainy season?

Hall: No, you can engineer this thing so that those rights of way — which,
by the way, go exactly where you want to go: they are at the back
of all of the industrial properties.- Most of industry, high
employment area, is next to the rivers, the drainage channels.
It ' s a great network, when you look at it, and it's there.

Morris: Already in the public domain.

Hall: Exactly. Allegedly. Although when I have raised this to county
supervisors, they say, "Oh, no, that's flood control district,
that's very complicated. You can't do anything with those."

Morris: Flood control districts are not in the public domain?

Hall: They are a little separate fiefdom. I'd love to have them

investigated sometime. But if you combine that with the wasted
space in electrical transmission rights of way, you have a hell of
a grid, you've got a great series of rights of way. So, that was a
project I had started that never got anywhere, because the highway
guys don't really believe in transit and it's too complicated for
them.

Hall: Also, the state economic data bank was something that I had

started talking about.* I never got any place with it — which is
something whose time has come, although nobody has figured out the
way yet to sanitize or neutralize data from private sources through
a system and then sell it to subscribers. See, the utility companies,
the telephone company, have a tremendous amount of economic information
simply by the fact of who's using their telephone and who isn't
using their telephone and where they are.

Morris: Yes. The banks also provide data which is funneled into the
finance department estimates.

Hall: Some. That was just another —

We are talking about relationships with Finance and I started
talking about when I was superintendent of banks and being confronted
by something that Cap Weinberger was calling a hearing on.

I said, "Wait a minute, we're on the same team. I am not going
to consider this budget discussion that you and I are having a
hearing; I don't like the terminology." Cap understood. The
typical Finance attitude is that they're above everybody else and
you have to come to them for money and they're going to hold hearings
on fellow departments. I didn't like that, so when I came to him,
since I had an independent funding source anyway and didn't have to
grovel quite as much as the rest of them, I was not — I considered
the director of Finance an important person, but certainly not a
superior person. So that was my initial introduction to the
Department of Finance.

Then when I was in B and T we had some battles. In fact, as I
was transfering from B and T to Human Relations I was still in
charge of the B and T budget, and we had a knockdown dragout. It
was right after Christmas of '70. There was something about the
Highway Patrol budget, and Verne and I just really bashed heads; I
can't remember what the hell it was. But I rather absurdly said that if
this was the kind of cooperation that I was going to get from
Finance, when I get into a really difficult situation in Human
Relations, then to hell with them, I'm not going to do it. Which
was not rational, not the right thing to do, and it offended a lot
of people, too. It was another nail in my coffin that I drove myself.

*See pp. 18, 24: Report: The Governor's Manpower Policy Task Force,
August 1972. In appendix.

100

Confirmation Hearings

Morris:

Hall:

Morris:

Hall:

Morris:

Hall:

Morris :
Hall:

Morris:

Did you have to be confirmed as secretary of Health and Welfare?
Yes, as far as I know; I can't remember. It was not difficult.

They didn't take you to task because of your predecessor's
difficulties or because of the reports about the reform legislation?

Maybe they did.

It didn't leave a mark upon your hide. [laughs]

No. That's a game — it used to be a game. You used to know whether
you were going to be confirmed or not, there wasn't any question
about what was going to happen. So what you'd try to do is return
all the serves. You'd be as pleasant as you possibly can. When
somebody wants to go personal or insulting you smile, and try to be
serious when they want to be serious, and joke when they want to
joke. You watch all the signals that are coming from your guys on
the committee, and you expect that they will intervene at the proper
times if it really gets tough.

Or if they think it's gone far enough.

That's right. Generally, we always got a much better reception in
the senate than in the assembly. The Senate Rules Committee was
more amenable to our way of doing things.

Was this while Hugh Burns was chairman or had Jim Mills of San Diego
become chair?

Hall: I think Mills was chairman by that time; I'm pretty sure.
Morris: He's from San Diego, too. How did you and he get along?

Hall: Oh, fine. He knows my sister very well. I get along with him.

And Jim was not petty at all. He had a lot of funny programs that
he wanted to push, but he was not petty in his operation. I resent
deeply the way [David] Roberti runs that place now, because now
it's no fun. From what I can gather they really kick people around,
and they are tough. They are very tough, and eventually they will
suffer because of that. It's become much more difficult, but it
was gentlemanly in the senate, at least. Carleson and Burton and
Bagley and those guys used to tussle, particularly Burton. Tony
Beilenson was the only one who used to get kind of difficult to deal
with.

101

Morris: He introduced welfare reform legislation in '71 too, didn't he?
That was what eventually was rewritten with the kinds of things
that you wanted.

Hall: I think that's true. Our bill was carried by Clair Burgener, the
reform bill, and it failed. It didn't get the votes.

Preparing to Implement Welfare Reform Task Force Recommendations

Hall: Getting back to our sequence of events, somewhere in late November,
early December, Ed talked to me about the Human Relations job. I
eventually said yes.

Morris: Against your better judgment?

Hall: Well, I was in the process of getting a divorce; turmoil pursued

me. It was challenging, that's what I liked about it, that was the
whole thing. With McMurray beating the drums and saying, "We've got
to do these things," I was challenged.

Morris: What was McMurray ' s background? Did he have a public policy,
political science, social welfare?

Hall: I think he was an engineer. Alex Cunningham is an engineer, and I
think McMurray was a mechanical engineer or something like that.

Morris: How had he gotten promoted to — ?

Hall: Political interest. Tom's mother — I don't know about his father,

but he is Lebanese by extraction. He was great with numbers, a very
excellent analyst, and also had a very creative approach as far as
policy. He could sit down and look at something and maneuver it in
the light and figure, "Gee, we ought to be headed in that direction
if we're going to follow the philosophy of Ronald Reagan and carry
out what he wants done." He was a tremendous planner and intellect,
so I felt very lucky. A lot of people couldn't stand him because he
was always squirreling around, agitating, arguing, and wanting to
push. And he was a busybody, a terrible busybody. [interviewer
laughs] "I love people like that because they are creative. In a
slightly different form, Carleson was the same way.

Morris: How about this report that you said you would only take the job if
Carleson came in as Social Welfare director, and he said he'd only
take it — You took him for a walk?

102

Hall: Basically. When I was approached on the thing, I knew that he had
to be involved. He was the only one of all of the people involved
in the task force who had a full grasp of the system. He came from
a public-administration background, and he was the right guy for
the job. So I negotiated that with Ed and that was easy to do,
because they were happy to find out he was interested.

Anyway, Carleson was approached on the job, and his response
was, "Okay, if Hall is going to be secretary." Because he did not
want to work for Vandegrift; he absolutely felt that that was sure
death. There was nobody else on the scene to carry out the
function, and we communicated well, so that was a mutual conclusion
that we reached. It was not exactly cooked up, but we reached it on
a consensus.

Morris: Yes. I was not meaning it was cooked up. But it's the human

interaction side of it — two boys on a dare: "I'll do this if you
do this," one of those things.

Hall: No, it was not that either. It was Bob's very careful analysis that
he was not going to succeed in getting the job done unless he had
somebody like me running interference for him. It was any analysis
that the job wasn't going to get done unless I had a guy like
Carleson to actually go out and fight the battles and guide Zumbrun
and the rest of these guys through the penetration that had to occur
in the Department of Social Welare. We both had that interlocked
understanding on the situation.

•

Morris: You had to redo the department in order to achieve the governor's

goals. How completely was that discussed with the governor and the
cabinet?

Hall: We're getting a little bit ahead of ourselves. Let's get through
December, because December was the crucial time. We had a meeting
and discussed all these things. I think we went away some place; it
may have been Santa Barbara, it may have been someplace else, I
can't remember.

Morris: Who was "we"?

Hall: The cabinet and the staff.

In early December, I think it was, where it was revealed that
I would be — no, maybe it wasn't yet revealed. I think Vandegrift
left early December, and maybe it was right about that time.

Morris: He wasn't at the meeting, I take it?

103

Hall: He may have been. We were not casting aspersions. He was still a
member of the cabinet, he was still head of the agency, and there
was a transfer process that we had to go through in any event. I
.think it had been concluded and he had been informed. He knew, and
it was all right with him, basically, that he was going to go and
be appointed to a court position.

Morris: So how did the meeting go?

Hall: Calmly, but vaguely. The whole problem was Ned not fully being in
touch with the subject matter.

Morris: He was making the presentation?

Hall: There was a brief discussion. I can't remember a whole lot of other
things, but this was one of them.

Morris: This sounds like the post-election retreat that 1 have heard
references to.

Hall: That's quite possible. See, I was so totally away from the campaign
that I have no, recollection on that one. We just didn't do anything
political. I may have gone to a couple of fundraisers, but just.
kind of to be there and be around. We were not out doing political
assignments. Very different from the federal cabinet, where the
federal cabinet really is put on assignment in a campaign. They're
out there making campaign speeches. We were not doing that.

Morris: It's interesting administratively. Again, from outside, my concept
would be if you were in October, November of the fourth year of a
term, you would be thinking in terms of your work — either, "I'm
going to have to wind it up by January," or "If we get re-elected —

Hall: I was very concerned about getting our internal procedures

straightened out and getting our priorities in order, and I don't
think that re-election was a big question. We all had on-going
projects and programs, plus the annual budget cycle which had to
proceed.

Hall: It was agreed that I'd be secretary and Bob would be director of

Social Welfare, that Ron Zumbrun would be his chief counsel. Chuck
Hobbs was at Social Welfare. Bob took Jack Svahn, who is now in
the White House — Hobbs is now in the White House, too, by the way,
on the staff there — and Carl Williams, who had been at Public Works
with him and had worked on the task force. So, it was a compatible
group. The problem was Ned.

104

Hall: We had a meeting at the Sutter Club, must have been after Christmas,
and there was a full presentation that Ned put on on the final
results of the welfare task force. Presentations were made and the
governor was pleased and all the rest of it. Ned said, "And a
report will be produced on all of this." I can almost mark the
spot on the sidewalk outside the Sutter Club where Earl Coke and I
had this pleasant exchange: Earl said, "You're never going to see
that report," because he did not have a whole lot of faith in Ned's
ability to get things done. And I said, "Earl, yes I am. I'm
going to make it happen."

I already knew what the problem was because I'd been coached by
Bob as far as the actual operations of the task force. I knew the
status of their data and the condition of it, and I already had
McMurray working on the report. Tom had promised that he would have
it done by New Year's Day and he was working on it. He had to stay
up late and work very hard, but he got the thing written so it was
actually done on the first of January and we had the final report
of the task force. Because we had to get over the task force
period so we could go into an operational mode.

Formulating the New Welfare Program, January-February 1971;
Initiative Strategy

Hall: We then started meeting constantly, formulating the basic program —
these are the six or eight points that are laid out in Meeting the
Challenge* — because I insisted that we have specific objectives
understood and agreed to before we started writing legislation or
trying to do anything along those lines. That was what I consider
to be my major contribution to the whole effort: making sure that
we transitioned properly from the task force to the operational
planning activity; getting our objectives well laid out and
understood among Carleson, Earl Brian, myself; transmitting that
to the governor's staff and making sure that they understood what we
were talking about and what we were planning on doing; getting
clearance and then coming back through the process of writing the
program.

There were a couple stages during January and February where
it got pretty tense — I think we had picked March first as the kickoff
or the revelation date. We had developed strategies which eventually

*Meeting the Challenge: A Responsible Program for Welfare and
Medi-Cal Reform. Reagan report to the legislature, March 3, 1971.

lOAa

A RESPONSIBLE PROGRAM

FOR

WELFARE AND MEDI-CAL
REFORM

RONALD REAGAN
Governor of California

CALIFORNIA LEGISLATURE
»dne»day, March 3, 1971

105

Hall: turned into the strategy for the initiative.* I think George Steffes
came up with the idea, almost in an offhand way, that if we couldn't
get it through the legislature then we ought to go to the people
with it. I grabbed at that. We concluded that it was possible to
put together a package that could be carried in an initiative,
and everything that we did from that point forward was aimed at that
dual-track approach.

Morris: The initiative that eventually ended up was Proposition 1, or the
backup initiative in case the legislation didn't go through?

Hall: No, no, the backup initiative. It was always the threat that we
had, and that's the reason that the citizen's organization was
put together. Bob Walker in the governor's office was in charge of
that — another San Diego product. Not really a product, a way station
for Walker. He had been the executive for Republican Associates
(in San Diego). Bob organized the outside citizen's activities. He
had a lot of help from the California Chamber of Commerce. Roy
Green — who just died — in Sacramento was very, very instrumental in
coordinating that and also giving me feedback.

Very rapidly that whole citizen's thing was totally beyond our
knowledge. We didn't know what was going on, and that was all
right because it was political. See, here's another one of these
bifurcation situations where outside political things were basically
run only by certain people out of the governor's office and we
didn't have anything to do with it. As a matter of fact, we really
didn't want to have much to do with it. We didn't want to have to
stand up and either defend or say that they were shock troops for us
or anything like that , but we knew that generally they were getting
organized.

Roy Green was one of the communications links. Roy eventually

was the one who came to us and said, "Things are getting screwed up,

there is confusion, they don't know what they're doing," et cetera,
et cetera.

Morris: The people in the department were not carrying out — ?

Hall: No. In the governor's office, and in the relationship through to
the citizen's group, and publicity, and community activity and
things like that. It seemed to be getting out of control, which
eventually led to part of the problem between me and Ed Meese on
this situation.

*0peration Crossfire.

106

Hall: So, there was a lot of midnight oil burned January and February.
On one occasion [laughs] , when we were actually writing this
thing, we had gone through a couple of drafts and then it was too
legalistic and it was too dry.

Morris: The bills or —

Hall: The text, the description of the program. It was coming out of
Carleson's shop in legalistic form. We were taking a couple of
cracks at it, but we really didn't have the capacity to do an
editorial job on it, so we brought over Ed Gray from the governor's
office. I can remember one night when not only Ed Gray but Meese
and [James] Jenkins were there. Everybody was working on parts of
this thing; trying to make sure that it was sound, trying to make
sure it had an effective financial side to it, that everything fit
together properly. And we got it done on time.

Governor Reagan Announces Reform; Seeking Waivers from the
Federal Government

Hall: The governor had requested that the legislature meet and allow him
to address it. Mills fell for the trap and said, "No, I refuse
to allow the governor to present his welfare reform program."
So he came to Town Hall in L.A. and we had a lot of press on that.

Morris: Is Town Hall a building or is this a radio pro'gram that is called
"Town Hall"?

Hall: No, it's like the Commonwealth Club in San Francisco; it's the

equivalent. It is an organization that presents current matters of
interest to the public. It's a regular program, and they do
syndicate their radio speeches, so it was a good outlet and a good
audience. It's basically a conservative organization — although it's
nonpartisan — but just by the nature of things, people who are
interested in public affairs and such show up, so that was quite
effective. Then the governor went on the road. He met with people
up and down the state. You have all this story from others.

In the meantime, I was trying to run this agency office. Bob
and his guys were issuing regulations. We were conferring regularly
on that and the tactics of legal defense, because we knew what was
going to happen. [Senator] Clair Burgener was selected as the
author. We went to the senate first; it was killed. We kept it
intact. We would not allow it to be amended, because we wanted that

107

Hall: as the vehicle for the initiative. Our position was that it was a
carefully balanced program and that if you took away any element
that might not work, et cetera, et cetera. Called for a closed-end
budget, called for equitable apportionment, which was Bob's
expression. It had a lot of good aspects.

One of the things I liked the most about it was that it raised
rates for AFDC mothers .. From [$]221 to [$]280, I think, was the final
result there. This had been a surprise to everybody that those
things — When you are at absolute zero in the system, when you are
the lowest part of the system with a child, that you only got $221
a month. You had some allowances, but still, that was the basic
grant, which we all recognized as being too low. By the way, in
those days a round-trip ticket to Sacramento was something like
$20, so [laughs] inflation has taken its toll. Nonetheless, we
all recognized that it was very much in need of reform at the bottom
and lopping and pruning at the top of that scale.

We injected the work experience program, which had not been
originally part of our thinking; but as we discussed and talked
about our objectives, it became part of our approach. That's what
brought us into major conflict with HEW in Washington. Gaining the
waivers for certain of our program changes was a major battlefield.
At the same time in all of this, starting in the spring of '70, we
had been receiving briefings from Jim Jenkins on the Family
Assistance Program — Nixon's program — so we were fighting that off.
We were opposed to that because of a whole host of things that we
found were wrong with it, so we were not really welcome around
Washington.

Getting a waiver for a new kind of program was not easy. We
had lots of discussions throughout the year with Nixon people, with
(Secretary of HEW) Elliott Richardson and others, trying to get the
waiver, particularly for the work experience program. Somewhere along
the line — I guess it was when we met with Nixon in San Clemente
(Reagan and Meese and Jim Jenkins and I were part of that discussion
with President Nixon, and Ehrlichman was there taking notes) — I raised
the suggestion that it's a shame to take money away in withholding
from the payroll of low income people and then wait nine months or
a year, and then give it back to them either in return of income
tax, since they're not taxable, or else not return it to them
because they failed to claim. This has an immediate impact at the
area where it is most important, that they have immediate cash.

Morris: What was Mr. Nixon's reaction?

108

Hall: He turned to Ehrlichman and said, "Write that down, John."

Eventually, it has been slowly creeping into our tax law that the
lower income people — the minimum taxable area has increased and
there are earned income credits now that didn't use to exist. So,
it may have some effect.

Morris: In general, what was Nixon's reaction to these guys in the state
government challenging his federal program?

Hall: His perceivable reaction was of pushing his program, being positive,
being diplomatic when he was together with Governor Reagan. What
his secret backroom reaction was we could only imagine, but we
imagined that it was pretty violent, and that's probably true; I've
never talked to anybody who might know. Richardson is the only one
I've seen of that crowd, and he gets livid when you talk to him about
Bob Carleson. Maxine [Mrs. Hall] sat next to him at a dinner party
in Washington in 1978, I guess it was, '76 or '78. He had had a
couple too many drinks, and she got to talking about welfare reform,
and he was pounding on the table about that goddamned Carleson and
all the trouble he caused. Maxine said, "You know, Carleson worked
for my husband and -my husband was the one who was pushing him to
do these things." Well that didn't matter, it was still that
goddamned Carleson. [laughs]

It made a big impact because Bob, when he wants to burrow in
and really cause some intellectual problems for people, he knows
exactly how to do it. We were giving them fits, because we were
causing them to have to respond in ways that they didn't expect they
would have to. We would narrow the debate down so they wouldn't
have much of a choice.

They eventually granted waivers (for the work experience program) ,
but they were limited waivers. We didn't get all of California, which
is what we wanted. We got a selection of counties which was probably
not representative and probably not sufficient to show a controlled
atmosphere within a jurisdiction. What we had was sub jurisdictions
from which people could move into another county that was still
under federal rules. So that if they didn't want to report for
work they'd just move to another county, get on welfare over there,
and that was the easy way out of the work experience program.

109

Earl Brian's Management Style as Secretary of Health and
Welfare, 1973

Morris:

Hall:

You said something a little while ago about Earl Brian carrying on
his own approach to this. Had he been part of putting together
this package?

Yes. Earl had the Medicaid side, Medi-Cal and all of that. I had
a lot of faith in Earl. I think he's a very intelligent person,
very aggressive. While we were doing all this, while I was still
at B and T — well, somewhere along the way, and maybe it was later
in the year 1971— Earl came to me and said, "You know, we're all
screwed up as far as our tax situation." He had figured out to his
own satisfaction that the governor was not being properly informed
as far as taxation and revenue, and he was taking on Verne Orr. He
convinced me that he should have an audience with the governor,
and it was a frontal attack on Verne.

I went along with it — and this was more on my structural theory
than really thinking it through — but my general management theory is
that if I've got a department director who has a strong feeling
about a program then he should have a right, since he's an appointee
of the governor, to tell the governor. Now, I will control that
up to a point, but if he is prepared and if he wants to make a pitch,
then I'll let him do that. I got identified with the attack, I
think, and properly so; there wasn't any way I could avoid it. We
met privately at Reagan's house in his basement and Earl went through
his presentation with Verne present. I don't even think Meese was
there, it was just the four of us. There was no conclusion to it,
really. It just kind of rolled on for a while.

I ran across a clipping — and I'll have to do my research on
it — apparently a memorandum that I wrote, which was probably based
on Earl's work with McMurray's input, got leaked to Larry Stammer
and became the subject of some public discussion. I just ran into
that when I was opening the box here the other day and I haven't
had a chance to track it down.

But in any event, Earl was in charge of the medical side of the
welfare reform. It was not only AFDC and all that but it was also
Medicaid, because it was all part of the same budget problem. Bob
was always suspicious of Earl's approach. I accepted it without
much probing. The way Earl did things, the way he operated, I
thought he was smart and I thought he knew what he was doing. I
thought he had good relationships with the legislators, both the
Democrats and the Republicans. It was eventually for all those
reasons that I recommended that Earl succeed me rather than Bob.

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Hall: And that's the way it was, which was disastrous. [laughs] It
really was, because within six months Bob was gone, Zumbrun was
gone, Svahn had left. The whole thing had slowed way down. Earl
was running for the U.S. Senate, which had always been his objective.
He had expanded the Human Relations staff to become a control
organization, directing programs in the departments. It had just
turned around. Where I was benign, he was active, and it was not
the right thing to do.

Morris: Did Bob Carleson leave partly because Brian was minding the store?

Hall: Oh, absolutely. Maxine and I were married on September seventeenth

of '72. Bob asked me — Bob was my best man — Bob asked me for Reagan's
private number that day and called him that day and said, "Governor,
I'd like to come and see you. I will be leaving your administration."

And the governor said, "Oh, no," but Bob said, "I have made
that decision, but I want to come and talk to you about it privately."
It was definitely the management style that Brian attempted to
impose. He was very control oriented, very audit oriented, very
get-in-and-criticize oriented. Rather than allowing these guys
to use their own intelligence and run their own programs, he wanted
to get in and do it himself. Exactly why that is I don't know, but
it sure slowed everything down.

Morris: Is that a hazard of being very bright?

Hall: I won't react to that question the way I should, since his style and
mine differ. [laughs] I don't think it is; I think it's simply his
style of doing business. Earl is aggressive, gets things done. He
thought he was a good manager. I don't think he understood that
there are different kinds of management for different kinds of
situations, that when he was a cabinet secretary it was not the same
as being the department director. It's an entirely different thing.
It's an overview, rather than getting in and directing programs and
"Fire him" and "Get this done."

Agency Deputies; Legal Strategies

Morris: Could we move on to a couple of the other aspects of that agency?

Hall: Let me tell you briefly about Lew Uhler, just so we have that clear.
Lew had the bad experience with OEO. I felt he had not been
properly supported by the governor's office in the OEO problem. He

Ill

Hall: was in the doghouse. I guess he was still at OEO or had been put
into some temporary assignment some place, kind of floating off
the governor's office.

Morris: That may be when he did the critique of the environmental goals
plan that I read.

Hall: I don't know. That sounds a little early for that. I think the

critique may have been done while he was the chief deputy in Human
Relations. We could check that through the records somehow.

I brought Lew in as my chief deputy because I admire his
enthusiasm, his good conservative outlook — he was much more
conservative than I was. He had some political experience and he
generally was an effective spokesman when you guided him. What Lew
needed was firm guidance and somebody to sit and talk frankly with
him about what was going to happen if he did so and so, as a
counsellor, more or less.

I did not have enough time to cover all of the departments of
Human Relations, so he was assigned basically to the Corrections side;
the prisons and all of that stuff. He would be sent to various
hearings and various other activities like environmental contact,
public health, things like that. It could be that that's how
he got into this environmental critique, I don't know. I can't
remember.

Morris: Would you and he sit down and talk before he went to a press
conference or before he went out to talk to the troops in one
department or another and say, "This is what I would like you to
convey"?

Hall: Absolutely. We had a regular staff process. Clyde Walthall was

my legislative guy and "press guy. Clyde was a professional journalist
but had also worked in the legislature, so he was my contact man
with the legislature. I think he had been on Monagan's staff.
Alex was my public relations and press guy who interfaced with
the press directly, with Clyde backing him up. Tom McMurray was my
program analyst. Lew was the chief deputy and second in command.
But Lew was always kind of the utility infielder. He was the guy
who, when I couldn't show up, he'd show up and that would be that.
We would all meet regularly and exchange all our information, and I
hope they understood what they were supposed to do. [laughs]

Morris: The comment has been made that Uhler was one of the more conservative
people in the administration.

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Hall: That's safe.

Morris: Did he bring back comments from the "far right" on how the welfare
reforms were going?

Hall: Not really, because that was moving too fast. We didn't try to keep
him up to speed. There were only a few of us who could actually
participate full-time in the welfare reform thing. I would be
meeting constantly with Bob and Zumbrun and his people reviewing
regulations, trying to figure out strategies as far as how to cope
with legal matters.

Morris: Those began as soon as the new plan of operations was promulgated,
did they?

Hall: Before, because usually we knew even before the language was set

what was going to happen. There were personnel things which had to
be handled inside Social Welfare, a complete reorganization there,
which was uproarious. That created all kinds of problems, again,
with Finance, because we had to get certain waivers of personnel
requirements in order to set salaries and move positions and lots
of things like that. We were not getting particularly good
cooperation in any of this stuff, so there was a lot of interface
work that I had to do with cabinet, with the governor's staff, and
with Finance to keep all of this moving.

Hall: In order to stay in front of the situation, we had to keep track of

what was being said in Finance, the Legislative Analyst's office, and
in the legislature and in the bars [interviewer laughs] , and every
place else where you picked up intelligence — and feed it back,
and then we'd figure out a tactic to counter whatever the other side
was doing. This was real warfare. Now you laugh about being in
the bars, but this is one of the key events of the whole sequence.
Bob must have told you about it.

Morris: In the bars where legislative people were?

Hall: Yes, sure, the legislative staff. They'd sit around and talk to
the legislative analyst's people. We knew that the analyst was
getting information out of Finance which was being used against us;
all of these things were happening. One of the welfare committee
staff people — we thought we had cut a deal some place along the line
on some language, and it had been agreed to in good faith by our
people. Well, one of our lawyers was in the bar of the Senator
Hotel after that meeting in the evening and he overheard at the bar
the Democratic staff guy laughing and saying, "Boy, they really
put one over on Zumb run's guys," and quoted the language.

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Hall: We had agreed — I think with Willie Brown or somebody — that this was
all set. Our guy rushed back over to the office and got a hold
of everybody and we had to intervene at the last possible moment.
This may have been during the time of the negotiation, but just as
the pen was about to touch the page we had to get in and change the
language. Zumbrun is the guy that can tell you that story blow by
blow.*

So the whole network was operating; all the lights were on all
the time. It was great fun. Lew basically didn't have that much to
do with the welfare side. He was aware because he sat in meetings
and heard about it, but he was wrapped up on the prisons and a lot
of the other things.

Morris: Employment, which was then called Human Resources, rehabilitation,
those kinds of things?

Hall: Yes.

Mental Health and Retardation Services

Morris: You said your other priority was the Department of Mental Hygiene.
Hall: Mental health.

Morris: Yes. Was that the concerns about too many state hospitals in

relation to the population that had been running since the beginning
of Mr. Reagan's governorship?

Hall: The effort at that time (Assemblyman) Frank Lanterman was making
was to localize the mental health program. Jim Stubblebine was
recommended as the director. We had a series of problems as far
as the directors, as I recall, and Stubblebine was recommended by
Earl Brian — had been director of mental hygiene in San Francisco, I
think. We hit it off very well and I liked Jim very much. His
approach was realistic and he kept me involved. I did some visits
to various facilities, but most of the time it was trying to figure
out what Lanterman really wanted and whether we could afford what
he was talking about.

*Interview with Ron Zumbrun in this series is in process.

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Hall: Lanterman was very key to us in the Assembly. He was on Ways and
Means and was a key player, so we had to go along with him on
many of these things. He was kind of the grand old man in some
ways. It is a policy that has not worked, unfortunately.

Morris: Going along with legislators, or the mental health programs they've
introduced?

Hall: No. The Lanterman approach, which he bought from the advocates

of that point of view, has resulted in a lot of our problems as far
as bizarre people on our streets, who are essentially suffering
themselves, who should be in a more controlled environment. And yet,
because they haven't harmed anybody and they haven't committed a crime,
basically, they cannot be helped. This is one of the things that
even liberal advocates of that point of view have now come to
realize that maybe we've gone a little bit too far as far as
community treatment and all the rest of it.

Morris: Frank Lanterman also had some legislation regarding the mentally

retarded which set up a sort of cradle-to-grave program, contracting
out to existing community agencies.

Hall: And Bob Gregovich, who was another San Diegan [chuckles] , was

brought in to help get that organized. Bob is very low-key in some
ways. He is now the director of that operation in the state of
Alaska; he has continued in that program. Bob did a good job. I
didn't understand fully what was happening, but I was satisfied that
we had competent people who were running the program.

Morris: And again, this wasn't visible enough in terms of the governor's
priorities to involve — ?

Hall: Well, we didn't try to promote these things; we were just trying to
get the work done. We were not really trying to attract a lot of
attention. On the one occasion that I can think of, I think we
put an announcement out of my office where I announced some positive
gain of some sort. We got a blistering note from Jenkins criticizing
me, us, my office, for always letting the governor put out the bad
news and we put out the good news. That's the kind of communication
that eventually drives you out of government, because it's unnecessary.
If Jim had had a bitch about it, he should have called up. Alex
(Cunningham) will remember that distinctly.

115

Morris: Was this an unusual press release that you put out, or was it just
that you put out a press release, or was Jim new in the public
affairs spot?

Hall: Oh, he was not new. Jim is a public affairs professional.

Morris: Right, but he had been in Washington and then he came back to the
governor's office.

Hall: But by this time he had been in the public affairs position for a
year, I think, in Sacramento. Some days you get up on the wrong
side of the bed [laughs], and that was one of the days. But it was
the kind of thing that really wounded us, because we felt we were
doing the right thing.

Prison Reforms; Governor's Vetoes

Morris: How about the prisons? You said Mr. Uhler did most of the day-to-day
kinds of contacts that needed doing.

Hall: As in a coordinating function, he did, but I depended on [Ray]

Procunier to tell me what was going on in the prisons. When there
were budget things , Tom McMurray would work with Lew and with
(Director of Department of Corrections) Procunier and they'd work out
budget matters and all the rest of it. I tried to stay as close as
I could with Procunier, but during the welfare siege of the first
half of the year, there wasn't much time. Shortly after the welfare
reform bill was signed, however, George Jackson tried to get over the
wall at San Quentin — there were five people killed and he was shot
going over the wall; it was a massacre. So I was in the prison
business from that point forward: I was visiting prisons, and I
was holding hearings, and we had a whole series of hearings on not
only security in the prisons but also prison reform, because there
had been a study going on of various changes in the prison system.
We held hearings into the late fall on that and heard from everybody
from the Quakers to the — you know,- just anybody who wanted to say
anything. If they wanted to say something, they'd have to be heard.

Morris: I gather that Procunier went charging down to San Quentin to

supervise what was going on down there after the shooting himself.
Did you go in?

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Hall: That would have been the normal reaction. I went down within a

week, I think, and toured the place. I'd been to the other prisons
and some of the Youth Authority facilities. I was chairman of the
Board of Corrections, so that necessarily involved me in the process.

Morris: Would you have been consulted when Mr. Procunier decided to ask Ron
Dellums and Cecil Williams and some of those leaders in the black
community to come in to take a look at San Quentin themselves? Was
something like that helpful or a hindrance?

Hall: Depends. I don't remember that specific instance. Ray knew enough
about how things worked that if he thought there was going to be
some press, and there might be some adverse press, then we were
all alerted. Normally this would be within his discretion, so
unless we felt it was going to turn into an anti-Reagan rally of
some sort we wouldn't interfere. We would appreciate knowing about
those things in advance so that we could prepare the governor, in
case anything was going to happen.

Morris: Did some of these hearings turn into anti-Reagan rallies?

Hall: No, not at all. They were very boring, which was exactly what I

intended. Precisely what I intended was flat monotones for hours.

Morris: There were a lot of activist groups getting organized at that point
and getting fired up. Were any of them coming up with suggestions
that were useful or points that hadn't been thought of?

Hall: No. By the time George Jackson attempted to escape, the prison

activist groups were fully engaged in their programs. During Spencer
Williams' time, shortly after Reagan became governor, they had
gotten the conjugal-visit rules changed and the weekends out and
all kinds of things. There was a lot of liberalization that occurred
before 1970 — a great deal — and Procunier gets the credit for that.
And Reagan does, too, because Reagan went along with it.

Unfortunately, there were revolutionaries involved. Mr. Bingham*
has surfaced again and will, I hope, be prosecuted in connection
with the George Jackson thing. He is the one who is alleged to have
smuggled the weapon in that was used in killing the guards. He has
denied that, so we'll see if they can — This is a long time he's
been gone, and I don't know where all the witnesses are, if any — because
it was only circumstantial in the first place; nobody saw him hand
the gun to George Jackson. Whether he will be convicted, I don't
know. I certainly hope he's prosecuted so we can at least test the
theories.

*Stephan Bingham did stand trial in the spring of 1986 and was acquitted,

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Hall: But there were a lot of activists around. The court cases were

coming out regularly, as far as prison rights, through the federal
court in San Francisco and eventually through the Ninth Circuit.
When they'd be appealed, we'd lose. There was a great deal of
liberalization of prisoners' rights in the '60s and early '70s.

Morris: In addition to the legislation that you were putting out from your
agency, how did the cabinet and the governor tend to deal with
legislation coming from the legislature with which the governor
might not agree?

Hall: We would be briefed by [George] Steffes or the legislative unit

on subjects that were not within our own jurisdiction. Most of the
stuff that comes out of the legislature falls into one of the buckets,
you know, so we would have known from the instant the bill was filed
through our own processes, through our own legislative staff people
coordinating with the governor's office. We would have known what
was going on in tracking the bills. It's a lobbying operation, both
defensive and offensive, so it was fairly rare that we would be
surprised by something that nobody had heard of.

Morris: A couple of people have said that Mr. Reagan paid great attention to
the bills that he vetoed, that they would be discussed, that the
messages were carefully done and had great impact.

Hall: Oh yes, of course. I don't know whether the messages had great
impact [laughs], but — In some cases perhaps the message itself
had some impact, but typically these things are — Everybody knows
how it's going to turn out: either the veto is going to stick or
it's not going to stick. One of the things that we were always very
critical of among many of us who wanted a more activist program —
harder, more direct program — on some business regulation issues — we
wanted more vetoes; we wanted less compromise; we wanted more
testing of where the borders were.

It was doctrine in the governor's office that the governor had
never had a veto overridden. So we felt that they were constantly
eroding the ideological purity, if you will, of various bills, and
they got compromised and mushed up until, you know, who could be
against them?

118

VIII CONSERVATIVE AND MINORITY CONCERNS

Pacific Legal Foundation, 1971

Morris: When you say that you were looking for more activist programs on
business regulation, [do you mean] to tighten up regulation of
business?

Hall: No, to loosen them, to move more toward a free-market system in
various ways. But that's a random example. I think the
environmental situation that developed, which started out as simple
problems of power-plant siting and eventually came down the chute
with Pete Wilson and all of the Coastal Commission stuff, that was
very difficult and I think it was not properly handled. I don't
think the governor's office ever anticipated how strong the movement
was going to get. They misread it and then they tried to compromise;
it was just a mishmash, a very disappointing outcome. It has been
extremely frustrating to California citizens, regardless of their
political stripe. When somebody's house is being swept out to sea,
he wants to rebuild the seawall, and the Coastal Commission says,
"We'll let you biild the seawall, but you've got to dedicate 20 feet
off of this 60 foot lot for public access," that's taking property,
as far as I'm concerned. We have sued and won through Pacific Legal
Foundation on those kinds of issues.

Morris: When did the idea of Pacific Legal Foundation surface?

Hall: Sometime in mid- '71, Roy Green and Zumbrun and I, and probably

Carleson, were sitting in my office strategizing because of court
cases that were coming along. We were talking about the welfare
rights organizations who were our opponents, and I said, "Why can't
we have somebody in there representing the public interest in this
thing? We've got the attorney general, who is obviously wearing a

119

Hall: black hat; they are our guys, so they are categorized immediately.
There are the welfare rights people who are representing a small
element of society. Why can't there be somebody representing the
public?" The question, I suppose, hung in the air.

Roy picked up on it, and Ron eventually picked up on it. Roy
was the contact man with the Chamber of Commerce, and Zumbrun —
because of the Earl Brian situation [laughs] — was going to get out
of government and decided that was going to be his exit vehicle.
He got the whole thing organized, in early "73 it was launched, and
we've been going great guns ever since. It was very exciting.
Ron has done a beautiful job, and Roy in the early stages did a great
job.

Opportunity Funding Corporation

Morris: You're still on the board?

Hall: Yes. I'm still on the board of Pacific Legal Foundation — which is
hard-core conservative legal fighting — and I'm chairman of
Opportunity Funding Corporation, which is minority enterprise. And
they really go together, believe it or not.

Morris: Okay. Tell me why?

Hall: [laughs] It's funny, I had lunch yesterday with Al Osborne — who
is associate dean of the School of Business at UCLA, is black, an
economist — and he says he has to explain every once in a while why
he is a conservative economist. He is now coming on our board at
Opportunity Funding Corporation.

My thrust as far as minority activities has always been that
the system is okay. There are some people who have been excluded
from the system. Now, if we can get them up to the starting line,
that's our obligation. They have obviously been kept away from the
real race, the contest. Our obligation is to make sure that everybody's
got a fair place on the starting line; we don't have to carry them
over the finish line. (This may have been a line out of that
speech. )

Morris: No, you've expanded on the idea since that speech.

Hall: Okay. Anyway, we don't have to carry them over the finish line,
but we do have to get everybody a place on the starting line; a
fair start. The guys in Washington and other people on our

120

Hall: (Opportunity Funding Corporation) board come from all different
stripes. Some of them are limousine liberals and others are
community activists; we've got all kinds. Slowly but surely they
have come around to that point of view, at least to the extent of
electing me chairman.

Tax Limit Initiative, 1973, and National Tax Limitation Committee

Morris: When we took a break earlier you said that you had some questions
about Mr. Boyar ski's comment that more conservative forces were
gaining strength in the administration by 1972.*

Hall: This may refer to the fact that Prop 1 and the tax reform took

form. That came out of that (1972) spring retreat that we took up
in the foothills outside of Sacramento.** McKinsey and Company
provided a couple of facilitators, management analysts and management
advisors, consultants. We split up into groups among the cabinet.
I was with Frank Walton, Verne Orr, somebody else, and then the
rest of the cabinet was off in another group. We took various
issues, subject matters, to try and project into the future what
really should be the programs of this administration for the next
two and a half years.

Our group got into tax reform, taxation, the cost of
government, all of these issues. It was natural because Verne was
there. Eventually, somehow, we got this issue of a limitation on
taxes, to put in a ceiling on the amount that government could take
from the people. This was eventually presented as a suggestion or
a recommendation. I don't think that we got much further than the
idea, but when I got back I got Uhler involved immediately. So
we started cranking some stuff up.

We concluded from a strategic standpoint that the governor
should not be involved. First of all, it's got to be an initiative,
a constitutional amendment — the governor should not be involved — and
we should proceed to get it organized on that basis. Get the
staffing done, get the data done, get the thing written, all the
rest of it, but keep the governor out of it. If he becomes the
issue, we're going to lose.

That's exactly what happened. He got involved; Deaver got him
involved. Everybody was unhappy as hell about the — or at least
those of us who wanted to see the thing succeed were unhappy. It

*Bill Boyarski, Ronald Reagan: His Life and Rise to the Presidency,
Random House, New York, 1981.

**See appendix for contents, Tax Reduction Task Force Report.

121

Hall: became a contest between Bob Moretti and Ronald Reagan, and Ronald
Reagan lost. It was very unfortuante, because we had a fairly good
shot in those days.

Now, the unfortunate part in my opinion is that it led to
Prop 13 [1978], the property tax ceiling, which I feel has caused a
great deal of disruption in local government, unnecessarily. I
probably could not have afforded this house if property taxes had
continued to increase as they had been increasing, but I would have
been out on the streets trying to prevent that. There would have
been a different kind of reaction.

My theory has always been that this is a republican form of
government. If I don't like the kind of representation that I'm
getting I'm going to change my representation, the guy that I elect
to the assembly and the senate. When the pressure comes on I want
those guys to feel the heat. Prop 13 took the heat off; they didn't
have to worry about anything. They could make speeches and do this,
but they could also be in favor of Prop 13. Which is exactly where
Jerry Brown ended up, because nobody had to do anything. All they
had to do was go to the treasury and spend all the rest of the
money that was already there, which was what Jerry Brown did [as
governor]. And then left us holding the bag.

I would have preferred for the legislature to have faced its
responsibilities. That's exactly what's going on now in the
Congress. We are asking them to set priorities in the budget; they
are refusing, they are running around in circles. Every interest
group is there saying, "You cannot take away what I've got." And
they are as usual — as they always have beeji — uncourageous , to be
putting it mildly. And we wind up with this situation where we're
going to stumble ahead very slowly.

That's why Uhler, after that experience, became the head of the
National Tax Limitation Committee. That is the reason I am on his
letterhead. He and I agree about these things. We do not believe —
or I don't; I don't know what Lew believes as far as a balanced
budget — I don't care about a balanced budget, but I do care about
tax limitation and I do believe it has to be a constitutional
stricture, because legislatures are slow to respond. So much for
that speech.

So if that's what Boyarski is talking about, that was only a
new manifestation of an old philosophy.

122

Morris: An idea of the people who had been in the administration for some
time.

Hall: No, new manifestation meaning a new idea, but the basic philosophy
is one of limited government; that's the fundamental theme.

Management Confusion in the Governor's Office

Morris: That retreat in mid- '71 apparently did not accomplish the goals you
had in mind. Is that why you wrote this memo in November of '71
saying that the goals were not very clearly — ?

Hall: No. The retreat that I was referring to where tax reform was
started was middle spring '72.

Morris: Nineteen seventy-two, okay. So that was after this expression of
concern in November '71 about the lack of goals.

Hall: And this memorandum, for all I know, may have led to that retreat
in the spring of '72; could have been. During the spring of '72,
I was very upset. I felt that we had personnel problems that were
not being solved across the government. We were having a lot of
confusion as to goals for the administration. We felt people were
being distracted by political impulses that were not ultimately
going to pay off for the governor, short range but not long range.

Morris: Are you thinking of the fact that that was a presidential year?

Hall: Yes, and the different ways that people would approach this kind of
opportunity. There were a lot of things that I was unhappy about.
I have a hard time now being specific about them, but it basically
surrounded the way the governor's staff was being operated and the
kinds of program options that were being picked. There were
failures of communication in many ways.

I tried to communicate with the governor on the thing. I did
not do it smoothly; it was a bad scene. He and I talked, Meese
and I talked, but my comments were going right over Meese 's head.
He was being courteous as he always is, but he wasn't listening. I
had had an offer from MCA on the table — I had told Reagan that in
February — so I finally picked up the option.

Morris: Was some of the lack of communication perhaps because by that point
the staff was rather large?

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Hall: Well, that was part of the problem. It was this Office of Planning
and Research, which was beginning to generate programs. My
management theory for the whole structure was that the governor's
staff was the governor's staff, it was his personal staff to do his
kind of work: politics, PR, whatever you want to call it. Analysis,
yes, but not program generation. We've got all these departments
out here who are supposed to be doing that, so now we're going to
have another department that's going to do what they're doing? So
we had this confusion of management and 1 could never get the story
across to Ed that this was destructive.

Morris: You wanted to tell me something about Mr. Hamilton and a Manpower
program you were involved in with him, because of him.

Hall: The Manpower Policy Task Force. When we concluded the welfare

situation — you know, I excused myself from the negotiation of the
welfare legislation. There were too many people around the table,
seriously, and my technicians were there: Earl Brian and Carleson.
Zumbrun was there. Meese was there as the governor's counterpart
and his right hand. And there essentially wasn't any role for me in
that negotiation.

I was monitoring this from Carleson 's feedback and Zumbrun 's
feedback all the time, and I did intervene at certain points. When
Steffes would get out of line — we had practically a fist fight,
because Steffes was accusing Ron and Bob of certain things, and I
told Meese in front of Steffes to get this guy off our backs. Not
off my_ back, but off my people's back, and to control his guy.
That's the way I looked at the organization: Meese had his guys, I
had my guys, they were supposed to be working together. But if his
guys got out of line, I held Meese responsible.

Morris: Steffes thought he should be running the — ?

Hall: Well, Steffes was the legislative guy. He was trying — The nature
of lobbyists is to compromise; this is what they always do. They
always want to make a deal, they want to get along, they want to be
looked upon as reasonable people.

Morris: For the next time.

Hall: For the next time. They have to live every day with these legislators,
so it's a perfect negotiating posture for the legislator: if he
wants to be tough, he accuses the other guy of being unreasonable.

124

Barriers to Employment

Hall: In the fall of '71 we recognized that much of our problem in the
welfare field tied to employment and barriers to employment. So
I said to the governor and we put in a cabinet memo and we made a
presentation, and I said, "This is going to be tougher and more
emotional and more difficult — as far as constituencies and as far
as the federal government — than the welfare reform, but I think we
have to do this. We have to find out where the barriers to employment
are which result from governmental action, and remove those barriers
so tkat people can become employed and useful citizens."

And the governor said, "Fine, let's go." He was all in favor
of these things, so we set up the Manpower Policy Task Force and
Tom (Hamilton) was the chairman. They worked through a lot of
material and did a lot of research and came up with a report in
March or April of 1972.* It never saw the light of day. I just
wanted to say that. [laughs] I've got a copy, probably one of the
few that exist.

I thought that they worked hard, they did a good job —

Morris: This is primarily a task force of people out in the community rather
than in government?

Hall: Well, they had to go through all of the Human Resources statutes
and work with them. Lew Uhler was involved. We put on a major
effort in this thing. I thought it was a very useful thing for
Reagan. Even if he didn't buy the whole package, it was still
something to carry on as a basic data line so that they would pursue —

Morris: A goal.
Hall: Yes.

Morris: Your phrase "barriers to employment within government" is one that
reverberates. What I also hear in my other ear is activist groups
talking about institutional racism.

Hall: Yes, sure. There are lots of government programs that started out
with good objectives which have become areas where you now restrict
people from what they can do on a productive, free-market basis.

*See appendix for title page and letter of transmittal , including
major recommendations. The complete report will be deposited in
the Reagan Collection at the Hoover Institution.

125

Hall: Now I'm not talking about child labor — necessarily [laughs] — but

there may be some aspects where young people can get into the work
force, earn some money, learn about the discipline or work — which
was the whole objective of the work experience program, by the way.
It was not to get work accomplished. It was another one of these
educational programs of having people go through the experience of
showing up, being handed a tool or a project, accomplishing something,
and then going out and look for a job; that was the process. It was
not to get the work done.

Is Working in Government Worth It?

Morris: Okay. You want to wind up with anything that I haven't thought to
ask you about that was important to you in Sacramento?

Hall: I guess the fundamental question: was it worth it all? And

subordinate to that: would I advise anybody else to do it? Maybe
that other question is not subordinate. Under the present circumstances,
I would explain in detail to anybody who was thinking about it
precisely what the cost is, and what they're going to encounter, and
what the payoff is, and then I would let them make their own decision.
My conclusion is that unless you are interested in elective office,
don't do it.

I was not interested in elective office; I was there to serve.
I was talked into it. I didn't want to go. Holmes Tuttle said it
was my duty.

Morris: He said that to a lot of people.

Hall: Sure he did. It was a very effective line; it works. He said

[adopts low voice], "Boy, it's your duty. We spent a lot of money
to get this man up here and now he's got to have some people around
him. It's your duty, boy." And approached that way in my youth, 1967,
I said okay.

Morris: Are you also saying that it's very difficult from outside to know
what the reality of working within government is truly like,
particularly if you're not a civil servant or an elected official?

Hall: Sure. So if you have an idea that you want to run for elective office
sometime, then, sure, go ahead and learn all about it; then you're
going to school. But if you're just there to do an effective job and
then go away, I think maybe you'd better practice your profession and
do that.

126

Morris: Well, is it any more difficult to try and get something major
accomplished in a governmental setting than in an industry
setting?

Hall: Is it more difficult?

Morris: Yes. Given a corporation the size of the California state

government, would it be just as hard to make a major change in how
that corporation operated?

Hall: There are similarities, but you have usually a more autocratic

structure in a corporation. Lines of authority are usually a lot
more distinct. Government is — we should be thankful that government
is dispersed in its power structure.

[End of Interview]

Transcriber; Richard Shapiro
Final Typist: Keiko Sugimoto

127

TAPE GUIDE — James M. Hall

Interview 1: February 14, 1978
tape 1, side A
tape 1, side B

Interview 2: September 19, 1984
tape 2, side A
tape 2, side B

Interview 3: April 26, 1985
tape 3, side A
tape 3, side B
tape 4, side A
tape 4 , side B
tape 5, side A
tape 5, side B
tape 6, side A
tape 6, side B
tape 7, side A [side B not recorded]

25
25
33

103

112

123

APPENDIX A

128

Governor Reagan July 9. 1971

Welfare Peform

Fes DO risibilities

I think you should b« aware that no one in the Human Relation! Agency
(including Social Welfare and Health Care Services) was consulted about
the format or content of Ken Wade's presentation on H. P. 1 Thursday
afternoon. This results, in great part, from a decision »y your staff to
split welfare reform strategy planning into several parts. Anything
having to do with federal legislation, including H. R. 1, is the responsibility
of Jim Jenkins; anything having to do with an initiative effort is the responsi
bility of Bob Walker and/or Jim Jenkins; anything having to do with California
legislation is the responsibility of George Steffes. During the soring I attempted
to bring all of these men together with the three department directors (Carleson,
Brian, Sheffield) and my staff to assure coordination of our efforts. The two
meetings that were held failed to stimulate a team effort, and I was finally
told heatedly by one of the participants that "I work for the Governor, not

you, Hall. "

•

If you prefer the existing division of authority and responsibility, I will attempt
to reorient my organizational concepts and advise the affected department
directors that they should report to specific members of your staff for specific
aspects of welfare reform. However, if the division of activ ties -hatf come
about because of a lack of confidence in the ability or capacity of the team I
have assembled to handle the over-all coordination responsibility, let me
assure you that we have both the ability and capacity, provided we have a
cooperative atmosphere throughout your administration.

As the member of your Cabinet with the Human Felations portfolio, I have
considered it to be my responsibility to develop welfare reform strategies for
your consideration, with the assistance and cooperation of your staff, and to
coordinate implementation of policies you establish. The division of responsi
bilities that has been imposed has made our efforts much leas effective than
they might have been. Our public assistance system is one fabric, with
federal, state, and local regulation and legislation inseparably interwoven.
I have been pushing, grinding, driving for welfare reform in every way I can
think of. In the process, I have barked a lot of shins, and, of course, calling
my concerns to your personal attention will not endear me to your staff.

# .

Governor Reagan . 129

July 9, 1971 -2

Some attribute to me political ambition*; I have none. Some think I am
trying to get another, higher job on your staff; I mm not. What I am
trying to do is make cure that the people of the United State* do not
lose what freedom remains to them because I was afraid to raise my
voice. Obviously, I am sticking my neck out; obviously, 1 will be con
tradicted, criticised, and condemned as a trouble-maker and disruptive
element. I will look forward to learning your reaction.

Sincerely,

JAMES M. HALL

APPENDIX B 130

JAMES HALL SPEECH

THIRD ANNUAL BOARD RETREAT
Interracial Council for Business Opportunity - Los Angeles
I LOOK BACK AT FIVE YEARS OF WHAT I THINK TO BE AN ACHIEVEMENT AND
CERTAINLY A LOT OF EXCITEMENT AND A LOT OF GOOD FRIENDSHIPS THAT HAVE
BEEN DEVELOPED. I THINK THE MOST GRATIFYING AND REWARDING PART
OF MY FIVE YEARS AS A SERVANT OF THE PEOPLE HAS BEEN MY ASSOCIATION
WITH MINORITY ECONOMIC DEVELOPMENT. THIS IS AN AREA OF WHICH I KNEW
ABSOLUTELY NOTHING WHEN I WENT TO SAN FRANCISCO AS SUPERINTENDENT
OF BANKS IN 1967. I'D LIKE TO BRIEFLY REVIEW WITH YOU TONIGHT THE
EXPERIENCE THAT I HAD TO LET YOU KNOW HOW IT ALL GOT STARTED AS FAR
AS I WAS CONCERNED, AND PERHAPS MAKE SOME COMMENTS ON SOME CONCERNS
THAT I HAVE NOW ABOUT WHERE WE 'ARE GOING AND WHAT WE ARE DOING.
FIRST I THINK I SHOULD COMMENT ON MY BIASES AND YOU CAN CALL IT
PREJUDICES IF YOU WANT. I BELIEVE IN A FREE MARKET SYSTEM VERY
DEEPLY. I THINK IT'S THE BEST ALLOCATOR OF SCARCE RESOURCES AND
I THINK THAT ALTHOUGH WE MIGHT BE ABLE TO CONCEIVE OF A BETTER ONE,
NO ONE HAS EVER BEEN ABLE TO MAKE IT WORK. I ALSO BELIEVE THAT ALL
MEN SHOULD HAVE AN EQUAL CHANCE AT THE STARTING LINE, IN OTHER WORDS,
THAT NO MAN SHOULD BE DEPRIVED OF RIGHTS THAT OTHERS ENJOY BASED ON
HIS RACE, COLOR OR CREED. AS PART OF THAT I DON'T THINK THAT ALL
MEN HAVE EQUAL TALENTS OR CAPACITY, BUT I DO BELIEVE THAT THEY SHOULD
HAVE A CHANCE TO PROVE THEIR TALENTS FAIRLY. FINALLY, I BELIEVE IN
LIMITED GOVERNMENT, A GOVERNMENT THAT DOES NOT INTERFERE IN THE FREE
MARKET .

NOW LOOKING BACK TO 1967, I WENT TO SAN FRANCISCO, I WAS SUPERINTENDENT
OF BANKS. THE BANKERS USED TO REFER TO ME BY THE INITIALS OF THE
OFFICE. ONE OF THE FIRST PROBLEMS THAT I RAN INTO INVOLVED THE BLACK

131

BANK THAT HAD BEEN OVERLY GENEROUS IN ITS CREDIT POLICIES IN ITS
COMMUNITY. WE HAD TO GO THROUGH A RE-CAPITALIZATION OF THAT BANK AND
IN THE PROCESS OF DOING THAT WE HAD TO CUT OFF CREDIT ESSENTIALLY
TO THAT BANK'S COMMUNITY. I RAN HEAD-ON INTO THE DILEMMA THAT I'VE

BEEN STRUGGLING WITH SINCE THEN THAT TRADITIONAL BANKING RULES

AND GOVERNMENTAL REGULATIONS THAT SURROUND BANKING ESSENTIALLY
EXCLUDE THE MINORITY ENTREPRENEUR FROM GETTING A FOOTHOLD IN ECON
OMIC DEVELOPMENT. NOW THIS DILEMMA IS PARADOXED, THIS IS SOMETHING
THAT I LOOK CLOSER AT AND REALIZE THAT THE MODERN URBAN GHETTOS
HAD INVISIBLE ECONOMIC WALLS. WE COULD DESCRIBE MOST OF OUR
DEPRESSED NEIGHBORHOODS IN TERMS OF LOW INCOME LEVELS, HIGH INVEST
MENT RISK, UNDER-EMPLOYMENT, AND YOU BEGIN TO REALIZE THAT THESE
COINCIDE USUALLY WITH AN ETHNIC OR RACIAL MINORITY GROUP, AND YOU
BEGIN TO GET AN IDEA OF WHAT THE PROBLEM IS. NOW REALIZE THAT
BECAUSE CREDIT IS INDISPENSABLE IN MODERN AMERICAN ENTERPRISE AND
BECAUSE THE BANKING SYSTEM IS THE PRIMARY SOURCE OF COMMERCIAL
CREDIT THAT BANKS, BY APPLYING TRADITIONAL RULES AND REGULATIONS,
WERE BEING REINFORCED BY GOVERNMENT BANK SUPERINTENDENTS AND EXAM
INERS. WE HAD A COMPLETE SYSTEM FOR EXCLUDING MINORITY ENTREPRENEURS
FROM THE ECONOMIC SYSTEM AND THAT WAS OBVIOUSLY WRONG. SOME OF THE
BANKERS THAT I TALKED TO SAID THIS IS REALLY WHAT THE SYSTEM IS ALL
ABOUT BECAUSE, AFTER ALL, THE FUNCTIONS OF BANKS IS TO RATION CREDIT.
THERE IS NEVER SUFFICIENT MONEY FOR ALL OF THE DEMANDS FOR MONEY AND
THIS PROCESS OF RATIONING OF COURSE, INVOLVES EXTENDING CREDIT TO
THOSE MOST LIKELY TO SUCCEED. THEY COULD POINT TO A RECORD, WHICH
THEY THOUGHT WAS PROOF THAT IT WAS JUST A NATURAL OUTCOME OF THINGS,
THAT MINORITY ENTREPRENEURS WOULD BE EXCLUDED BY THE SYSTEM AND THEY
ACCEPTED THIS DICTATE OF THE MARKET PLACE.

-2-

132
I THINK THE ANSWER THAT WAS DEVOLVED WAS THE ACCURATE ONE. AFTER

GENERATIONS OF EXCLUSION AND ACTIVE DISCRIMINATION, NE.GROS IN
PARTICULAR HAD BEEN SET FAR BEHIND THE STARTING LINE; IN OTHER WORDS,
THEY DIDN'T HAVE A FAIR CHANCE TO START WITH. THEY WERE NOT EVEN
UP TO THE STARTING LINE, SO THERE WAS NO WAY THAT THEY AS A GROUP
OR INDIVIDUALS HAD A CHANCE TO SHOW THEIR TALENTS. I ALSO REALIZE
THAT MONEY BANKERS HAD RECOGNIZED THIS DILEMMA AS WE HAD CONVERSATIONS
THROUGH 1967 INTO 1968. WE WERE PARTICULARLY ENCOURAGED BY THE
RECORD AND THE ACHIEVEMENTS OF ICBO, AND THE ESTABLISHMENT IN
MANHATTAN OF THE ICBO LOAN GUARANTEE FUND WITH MAJOR MANHATTAN BANKS.
WE TOOK THIS AS SOMEWHAT OF A STARTING POINT FOR THE DESIGN OF WHAT
BECAME A CAL-JOB PROGRAM. IN 1968 GOVERNOR REAGAN SIGNED THREE BILLS

WHICH ESTABLISHED THE CAL-JOB PROGRAM. THE THREE BILLS ARE THE

CALIFORNIA JOB DEVELOPMENT CORPORATION LAW; THE SMALL BUSINESS
ASSISTANCE LAW; AND THE "POOLED-MONEY" INCENTIVE BILL. THESE THREE

TOGETHER WERE CALLED THE CAL-JOB PROGRAM. BASICALLY THE CONCEPT
DREW ON ICBO IDEAS. THE FUNDAMENTAL CONCEPT IS PERMISSIVE, WE
SET ABOUT TO LOOSEN THE BONDS THAT TIED THE HANDS OF FINANCIAL
INSTITUTIONS. WE COULD ONLY DEAL WITH STATE BANKS BECAUSE STATE BANKS
ARE CHARTERED UNDER STATE LAW AND WE COULD CHANGE THE STATE LAW. WE
ALSO ENCOURAGED THE NATIONAL BANKS, WHICH ARE THE LARGER BANKS IN
CALIFORNIA TO JOIN WITH US AND PARTICIPATE IN THE CAL-JOB PROGRAM. WE
ALSO ASKED THAT INSURANCE COMPANIES AND SAVINGS AND LOAN ASSOCIATIONS
JOIN IN THIS EFFORT. WHAT WE DID WAS TO ALLOW THESE FINANCIAL ORGANI
ZATIONS TO FORM REGIONAL NON-PROFIT CORPORATIONS, WHAT WE CALL CAL-JOB
CORPORATIONS, AND TO CONTRIBUTE FUNDS AND CAPITAL TO THESE CORPORATIONS
WHICH WOULD THEN BE RE-LOANED WITH TECHNICAL ASSISTANCE TO

ENTREPRENEURS. WE REQUIRED THAT EACH OF THE REGIONAL CORPORATIONS
HAVE A LOAN COMMITTEE MADE UP OF EXPERIENCED COMMERCIAL LENDERS

133

WHO WOULD ANALYZE EACH LOAN PACKAGE AS IT WAS PRESENTED AND DETERMINE*
WHETHER OR NOT IT WAS BANKABLE TO START WITH. WE WERE NOT SETTING
UP A NEW BANK OR A NEW COMPETITOR FOR OUR EXISTING FINANCIAL SYSTEM.
WHAT WE WANTED TO DO WAS GET AT THE MARGINAL BUSINESS MAN, THE ONE
WHO PRESUMABLY WAS NOT GOING TO BE ACCOMMODATED BY THE EXISTING FINAN
CIAL INSTITUTIONS. THE BOARDS OF THE CAL-JOB CORPORATIONS WERE TO BE
REPRESENTATIVE BUT THE REAL CONTROL FACTOR WITHIN THE CORPORATION
WAS THE LOAN COMMITTEE. WHAT WE WERE TRYING TO DO WAS TO AVOID
FINANCING FAILURES. WHAT WE WERE TRYING TO DO WAS TO ASSURE THAT AN
ENTREPRENEUR, A NEW BUSINESSMAN WITH AN IDEA, WITH MOTIVATION, WITH
TALENT, BUT WITH INSUFFICIENT CAPITAL OR BACK-UP FINANCIALLY, IS
GIVEN A CHANCE TO GET INTO BUSINESS. THE STATE SUPPORT THAT WAS
PROVIDED, SINCE ALL OF WHAT I'VE BEEN TALKING ABOUT HAS BEEN COMING
FROM A PRIVATE SECTOR, WAS STATE LOAN GUARANTEE FUNDS. THIS LOAN
GUARANTEE FUND IS CONTROLLED BY THE CALIFORNIA JOB DEVELOPMENT CORPOR
ATION LAW EXECUTIVE BOARD AND THAT'S PROBABLY THE LONGEST TITLE OF A
BOARD IN THE STATE OF CALIFORNIA. WE CALL THAT THE CAL-JOB BOARD, AND
IT IS A BAORD MADE UP OF INDIVIDUALS APPOINTED BY THE GOVERNOR AND
BY THE LEGISLATURE TO CONTROL A MILLION DOLLAR GUARANTEE FUND WHICH
WAS APPROPRIATED IN 1968. ALLOCATIONS ARE MADE FROM THAT FUND TO
THE LOCAL CORPORATIONS AND UPON DEFAULT OF ANY LOAN THAT HAS BEEN
EXTENDED BY THE LOCAL CORPORATION,. THAT NOTE OR OTHER DOCUMENT THAT
IS PURCHASED BY THE CAL-JOB BOARD AND COLLECTION IS STARTED BY THE
STATE. ALSO THE POOLED-MONEY INVESTMENT BOARD, WHICH CONTROLS THE
DEPOSIT OF STATE FUNDS IN BANKS WAS PERMITTED UNDER THE THIRD BILL
THAT WAS SIGNED BY GOVERNOR REAGAN TO ALLOW THE STATE DEPOSITS TO
BE PLACED IN BANKS THAT ARE MEMBERS OF LOCAL CAL-JOB CORPORATIONS.
THESE DEPOSITS WERE TO BE MADE AT PREFERENTIAL RATES SO THAT THE
BANKS WOULD RE-COUP SOME OF THE OVERHEAD THAT THEY HAD INVESTED IN

. <^

THE CAL-JOB CORPORATION. THE MOST IMPORTANT BILL IN THE PACKAGE AS ;
FAR AS ICBO IS CONCERNED WAS THE SMALL BUSINESS ASSISTANCE ACT. ^*^"-
THESE PILOT PROGRAMS PROVIDED FOR CONTRACTORS IN NORTHERN CALIFORNIA
AND SOUTHERN CALIFORNIA NON-PROFIT CONSULTING SERVICES TO PROVIDE
MANAGEMENT AND TECHNICAL ASSISTANCE TO MINORITY ENTREPRENEURS. ICBO
WAS ONE OF. THE ORIGINAL CONTRACTORS AND HAS BEEN A SUCCESSFUL TECHNICAL
ASSISTANT CONSULTANT UNDER THIS PROGRAM.

WHAT ABOUT THE PERFORMANCE OF THE PROGRAM? THREE CAL-JOB CORPORATIONS
HAVE BEEN FORMED BY TWELVE MAJOR BANKS IN CALIFORNIA. THESE BANKS
HAVE PLEDGED MORE THAN FOUR AND A HALF MILLION DOLLARS FOR LENDING, .
AND $3.2 MILLION IN LOANS HAVE BEEN GENERATED THROUGH THE PROCESSES
OF THE CAL-JOB CORPORATION. LOAN LOSSES THROUGH THE CAL-JOB SYSTEM
HAVE RUN ABOUT 8.6% OF THE TOTAL CREDIT THAT HAS BEEN EXTENDED.
THIS HAS RESULTED IN 850 NEW JOBS OUT OF THE 106 LOANS THAT HAVE BEEN
GENERATED. ACTUALLY THE CAL-JOB SYSTEM HAS PROCESSED OR BEEN INVOLVED
IN NEARLY NINE MILLION DOLLARS IN PROPOSALS, NOT ALL OF WHICH OF
COURSE, HAVE BEEN ACCEPTED. HOWEVER, THE DOLLAR COST TO THE BANKS
AND TO THE STATES HAVE RUN 1.3 MILLION DOLLARS, 63% OF WHICH HAD
BEEN PROVIDED BY THE PRIVATE SECTOR. OF COURSE THERE ARE UNCOUNTED
PERSONAL SERVICES THAT HAVE BEEN EXTENDED BY THE PRIVATE SECTOR
IN THE FORM OF LEGAL AND ACCOUNTING SERVICES. MOST OF THIS TECHNICAL
ASSISTANCE COST HAS NOT BEEN REIMBURSED TO THE PRIVATE SECTOR, THIS
RUNS ABOUT 41% COST RATIO OF THE CREDIT EXTENDED. WE THINK THIS IS
EXCESSIVE AT THIS POINT. UNDER THE SMALL BUSINESS ASSISTANCE PROGRAM

THAT ICBO HAS BEEN PARTICIPATING IN, THERE IS A BETTER RECORD

3.4 MILLION DOLLARS IN LOANS HAVE BEEN GENERATED, THE LOSS RATIO
IS LOWER AT 6.3%, 621 NEW JOBS HAVE BEEN GENERATED AND THE TOTAL
COST INCLUDING LOSSES HAS RUN TO ABOUT 500,000 DOLLARS WHICH RUNS

135
ROUGHLY 14% OF THE CREDIT EXTENDED.

FROM THE TAX PAYERS STAND POINT, THE PROGRAM HAS BEEN IDEAL. IT

HAS SHIFTED COST TO THE PRIVATE SECTOR, WE HAVE GENERATED TAX
REVENUES AND EVERYTHING IS FINE. FROM THE STAHD POINT OF THE
PRIVATE SECTOR, AND PARTICULARLY THE BANKS THAT ARE INVOLVED IN
THE PROGRAM, IT HAS BECOME VERY BURDENSOME. THE FAILURE OF THE
STATE TO IMPLEMENT THE DEPOSIT INCENTIVE PROGRAM UNDER THE POOLED-
MONEY INCENTIVE CONCEPT HAS BECOME A FURTHER PROBLEM. ALTHOUGH
THERE IS AN EXCUSE, AND A CREDITABLE ONE DURING THE PERIOD 1969 TO
1971 WHEN THE STATE WAS IN A SERIOUS CASH FLOW SQUEEZE, THERE IS NO
LONGER AN EXCUSE FOR NOT IMPLEMENTING THE POOLED-MONEY INVESTMENT
DEPOSIT PROGRAM. WE SHOULD DO THIS IMMEDIATELY AND WE ARE MAKING
REPRESENTATIONS TO THE POOLED-MONEY INVESTMENT BOARD TO ACQUIRE
THESE DEPOSITS FOR MEMBER BANKS. I THINK ONE CONCLUSION CAN BE
DRAWN THAT TECHNICAL ASSISTANCE IS MORE EFFICIENT AND IS ABSOLUTELY
NECESSARY TO SUCCESS IN THESE PROGRAMS, BUT I WOULD CAUTION THAT
THERE MAY BE VERY LARGE HIDDEN COSTS THAT ARE NOT ACCOUNTED FOR IN
ANY OF THE STATISTICS THAT WE HAVE HEARD. IT MAY MEAN THAT IF WE
COMPARE THE LOAN RATIOS, IT MAY MEAN THAT TECHNICAL ASSISTANCE CON
TRACTORS SUCH AS ICBO ARE BETTER JUDGES OF THE FEASIBILITY OF LOAN
PROPOSALS THAN ARE THE CAL-JOB CORPORATIONS IN THEIR ATTEMPT TO
DO THE SAME THING. THIS REMAINS TO BE SEEN. WE INTEND TO EXPAND
OUR TECHNICAL ASSISTANCE CONTRACTORS TO FIVE IN THE COMING FISCAL
YEAR AND HOPEFULLY THIS WILL GENERATE SIMILAR EXPERIENCE TO ICBO'S
EXPERIENCE. WE ARE RUNNING INTO OTHER PROBLEMS THOUGH. ONE OBJECT
IVE AND ONE BASIC OBJECTIVE THAT I SET OUT TO ACCOMPLISH WHEN WE
PUT TOGETHER THE CAL-JOB PROGRAM WAS TO BRING BANKERS AND MINORITY
BORROWERS INTO DIRECT CONTACT. IN OTHER WORDS, NOT CREATE A NEW

-6-

BANKING SYSTEM FOR MINORITY BORROWERS BUT TO ASSURE THAT
WAS FREE FLOW AND FREE COMMUNICATIONS BETWEEN ANY MINORITY
BORROWER AND THE GENERAL BANKING SYSTEM; THE FULL POOL OF COMMERCIAL
CREDIT. I STILL SEE A PROBLEM HERE WHERE THE CAL-JOB CORPORATIONS
ARE USED AS A BUFFER BETWEEN THE BANKING SYSTEM AND MINORITY ENTRE
PRENEURS, AND I THINK THIS IS WRONG. I THINK WHAT WE HAVE TO DO IS
,SSURE THAT THIS IS AN EVOLUTIONARY PROCESS.

THE BIGGEST LESSON THAT HAS BEEN LEARNED, I THINK, IS THE VALUE OF
TECHNICAL ASSISTANCE. IT'S INDISPENSABLE, IT HAS TO BE ON THE SCENE,
IT HAS TO BE THERE WHEN YOU NEED IT. IT CANNOT BE REALLY CLASSROOM
TRAINING, IT HAS TO BE IN THE SHOP, IN THE BUSINESS. IT'S THE KIND
OF WORK THAT ICBO HAS DONE SO WELL. CREDIT IS ACTUALLY BECOMING
EASIER TO OBTAIN, PARTICULARLY NOW THAT THE ECONOMY SEEMS TO BE ON THE
UP-SWING. MOST LENDERS NOW REQUIRE SOME ASSURANCES THAT THERE ARE
POST INVESTMENT ASSISTANCE AVAILABLE AND UTILIZED BY THE MINORITY
BUSINESSMEN.

THROUGH THE CAL-JOB STRUCTURE WE PLAN TO BECOME MORE INVOLVED AS THE
COORDINATOR OF STATE AND FEDERAL PROGRAMS IN CALIFORNIA. WE WANT TO
ASSURE THAT THERE IS MAXIMUM IMPACT OF TECHNICAL ASSISTANCE DOLLARS
FLOWING FROM THE VARIOUS FEDERAL AND STATE PROGRAMS. LOU CARTER,
WHOM I'M SURE YOU'VE MET BY NOW, IS THE EXECUTIVE SECRETARY OF THE
CAL-JOB EXECUTIVE BOARD. LOU HAS DESIGNED A PLAN WHICH WILL BRING
TOGETHER ALL OF THESE RESOURCES INCLUDING MODEL CITIES AND ALL THE
REST; POOL THE RESOURCES AND PUT ON A DEMONSTRATION PROJECT IN THE
SAN FRANCISCO BAY AREA, WHEREBY THERE WILL BE FULL COORDINATION OF
ALL OF THE MINORITY ENTERPRISE ACTIVITY. HOPEFULLY, IF THAT PROVES
OUT, WE'LL EXTEND IT TO OTHER PARTS OF CALIFORNIA. REGIONAL

137

COUNCILS WILL BE ESTABLISHED FOR THE EXCHANGE OF INFORMATION AND
FUNDING. THROUGH THESE CLEARING-HOUSE OPERATIONS WE BELIEVE THAT
WE WILL BE ABLE TO MAXIMUMIZE THE IMPACT AND TO ACT AS A CATALYST
FOR NEW EFFORTS IN THE FIELD OF MINORITY ENTERPRISE. OBVIOUSLY
THIS IS SLOW PROGRESS, AND I'M BEGINNING TO SENSE A NEW WAVE OF
FRUSTRATION AND IMPATIENCE IN VARIOUS COMMUNITIES. I THINK WE'D
HAVE TO, AT THIS TIME WHEN THESE PERIODS OF IMPATIENCE HIT, MAKE SURE
THAT THE DEMANDS THAT ARE BEING MADE ARE INTELLECTUALLY HONEST AND
ARE REALLY LIKELY TO RESULT IN ACTUAL SUCCESS. WE'RE OFTEN CRITI
CIZED, AT LEAST MY THOUGHTS ARE, BECAUSE I WANT TO EMPHASIZE SMALL
BUSINESS. THE REASON I DO THAT IS NOT BECAUSE I THINK THAT IS THE
ONLY WAY TO GO. BOB HAS TOLD YOU THAT MANY OF THE LARGE PROPOSALS,
THE $250,000 PROPOSALS, HAVE NOT BEEN ACCEPTED BY LENDERS AND THAT'S
OFTEN UNDERSTANDABLE. I BELIEVE THAT WE SHOULD NOT SNEER AT THE
SMALL BUSINESS. IT IS VERY OFTEN THAT WE HEAR THAT THE "MOM AND
POP" TERMINOLOGY USED WITH CRITICISM WHICH DOESN'T REALLY PROVE
ANYTHING. I THINK IT PROVES A LOT BECAUSE THERE HAVE BEEN MANY SMALL
BUSINESSES THAT HAVE GROWN TO LARGE BUSINESSES OVER A COUPLE OF
GENERATIONS. THE BIG CORPORATIONS, THE BIG MARKETS, THESE ARE THE
TOUGHEST ONES TO BREAK INTO AND IT TAKES MANAGERIAL TALENT. THE
TOUGHEST PROBLEM THAT FACES ALL, NO MATTER WHAT COMMUNITY OR WHAT
GROUP YOU COME FROM IN SOCIETY, IS FINDING GOOD MANAGERS AND IT APPLIES
TO EVERYBODY. AS WE HAVE BEEN THROUGH THE PROCESS OF TRYING TO
CHARTER BANKS, BOTH MINORITY BANKS AND WHITE BANKS, TIME AND TIME
AGAIN WHEN I WAS SUPERINTENDENT, I WOULD HAVE TO TURN DOWN APPLICATIONS
BECAUSE THEY COULD NOT FIND A GOOD MANAGER FOR THEIR BANK AND THIS WAS
WHITE OR BLACK. DEVELOPING MANAGERIAL TALENT MAY TAKE GENERATIONS.
IT WILL TAKE A STRUGGLE TO DEVELOP THE POOL OF MANAGERS NECESSARY TO

138

MAN THE STRUCTURE OF BLACK CAPITALISM. IT'S HARD WORK, IT'S GRIND!
WORK. INDIVIDUAL ACHIEVEMENT IS THE KEY AND IP „.. NOT EARNED, IT'S
WORTHLESS. THERE ARE MANY PATHS TO THE TOP THROUGH THE PROFESSIONS
SUCH AS LAW OR ACCOUNTING, EVEN THE MEDICAL PROFESSION; THROUGH COR
PORATE MANAGEMENT, THROUGH INDIVIDUAL EFFORT IN SPORTS, IN ENTERTAIN
MENT, OR INVENTION. EVERY PATH HAS THE SAME MARKERS FOR EVERY MAN
AND WOMAN - — SELF RESPECT, A WILLINGNESS TO PURSUE A DREAM, AND A
RESPECT FOR ONES FELLOWMAN . I BELIEVE, AS I SAID, IN THE AMERICAN
ENTERPRISE SYSTEM. I BELIVE IT CAN BE MADE TO WORK FOR ALL MEN AND
WOMEN AND NOT RHOUGH THE GOVERNMENT TAKING FROM SOME AND GIVING TO
OTHERS. BUT BY THE GOVERNMENT TAXING LESS SO THAT THE SAVINGS IN
CAPITAL CAN BE BUILT INTO FORTUNES. BY GOVERNMENT HOPING TO ERASE
AN INEQUITY THAT INFECTED OUR SOCIETY FOR CENTURIES. OUR LONG-TERM
GOAL MUST BE TO ASSURE THAT EVERY MAN AND WOMAN HAS AN EQUAL CHANCE
TO SUCCEED OR FAIL ACCORDING TO HIS TALENTS. I'D LIKE TO CLOSE
WITH THE WORDS OF THOMAS WOLF — "TO EVERY MAN THE RIGHT TO LIVE,
;TO WORK, TO BE HIMSELF, AND TO BECOME WHATEVER HIS MANHOOD AND HIS
VISION CAN COMBINE TO MAKE HIM, THIS IS THE PROMISE OF AMERICA".

•

-9-

139
APPENDIX C

Ed Meese ^ — - ^_^— - November 9, 1971

Development of Reagan
Administration Prioritic

I was reading The Unheavenly City last week when it suddenly .truck me that
the author was describing what we are doing right now. In a nut shell, we
are failing to identify what is important to accomplish, and instead, we are
reacting on the basis of expediency and perceived pressures.

Since last year I have periodically requested the Cabinet to attempt to come
to grips with the question of priorities. On July 20. 1971. I asked, during
» meeting of the Budget Committee of the Cabinet, that the committee
schedule a discussion of the establishment of priorities in our fiscal and
political planning. At the same time. I also asked that we schedule discussions
of salary policies, the question of the working capital reserve, and the
question of capital outlay policies. I renewed these requests as recently as
October 28. at a breakfast meeting of the Cabinet. Although I failed to
recognize the close connection at the time, at that same meeting on October 28,
you requested us to schedule an all day session November 26 to identify our
1975 goals. At our meeting on Tuesday morning. November 2. John looker
described (very professionally) his complex planning process, without really
telling us why the process was going on.

All of these pctivities are a waste of time without first deciding what our
priorities are going to be. Perhaps that is what you intend to accomplish in
the process of identifying the 1975 goals. However, requesting identification
of problems and solutions probably will not accomplish that result.

The salary maneuvering on November 4, which would have locked the Governor
into a 1972-73 salary policy prematurely, was the clearest signal yet of our
inability to develop policy on rational grounds. If any individual member of
the Cabinet is determined to bring a matter before the Governor, regardless
of strong negative opinions on the particular ismue, then we should insist the
Cabinet procedures be followed, and that a Cabinet Issue Memorandum be
prepared and circulated prior to the time the issue is presented. Permitting
Earl Coke to proceed according to his own rules and methods is destructive
to the whole process, and deserves our united censure.

140

My conclusion to all thi» is that we are not serving the Governor well. You '
are the first among equals on the Cabinet. I assume the Governor expects
you to lead the Cabinet and his staff. In my opinion, this Administration is
in a skid that could become uncontrollable. I am ready fend willing to assist
you in a constructive, nonplatitudinous effort to get back on the track.

JAMES M. HALL
Secretary

141

APPENDIX D

NOT FOR PUBLICATION OR DISSEMINATION

THE GOV

R POLICY

TASK FORCE

AUGUST 1972 SACRAMENTO. CALIFORNIA

: 1 | } i I -' ?

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*' ! ss,,.J 2 I « Is r '"" ! i ^ ! i '""'""

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i •.

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:.,-., / H^^C i \ *W\ =-^— L^\\\ :?•'•' VN 1 -of

„-. .x ! / Cs-stT-gniry \ ^>J ^°'':r/ J^i- • \ X • ^ «.;«.-»• / X \ &''"--1 '

vv / .." ^-^f^' '*"~-~' : -, •. ! \ / .XV — ;=>'

\v\" -/

present manpower maze

142

August 16, 1972

The Honorable Ronald Reagan
Governor of California
Sacramento, California 95814

Dear Governor Reagan:

On March 20, 1972, you charged this Task Force with the develop
ment of a manpower policy for the State of California. We accepted
that charge, and I transmit herewith our report.

Our work has convinced us that certain basic concepts must be
accepted if a comprehensive manpower program is to be developed:

1. Economic development and the resulting increased private
employment is the only long-range solution to unemployment.

2. A systems approach is needed to effectively administer the
manpower program.

3. For a systems approach to be feasible, block funding of all
Federal manpower funds entering California must be achieved.

4. All Federal and State manpower funds must be controlled and
accounted for at the State level.

5. Tax reductions are essential if the private sector is to grow
and provide jobs.

6. Government must do a better job of income maintenance for
those individuals who, for bona fide reasons, are unable to
work.

7. The public education system must do a better job of preparing
young people for work.

8. Barriers to employment which keep certain groups of people
from jobs must be removed.

143

The California Chamber of Commerce deserves special commendation
for funding the Task Force through contributions from private business
and industry. We believe that this emphasizes the critical importance
of manpower in the minds of those deeply involved.

The members of the Task Force have worked hard and willingly, and
I commend their services to you. The loaned executives and staff
members I also commend for their industry, ability and resulting
contribution. The staff and resources of the California Chamber of
Commerce have been made available and have been extremely valuable,

v/e feel that you have honored us by appointment to this Task Force ,
and for that we express our appreciation and our willingness to aid
in the implementation of our report, if you should want to call upon
us in the future .

Respectfully submitted,

THOMAS HAMILTON, Chairman
Governor's Manpower Policy Task Force

(ii)

APPENDIX E 144

TAX REDUCTION TASK FORCE REPORT

Table of Contents

FINDINGS AND RECOMMENDATIONS
SUMMARY OF PRINCIPAL RESEARCH MATERIALS

RESEARCH APPENDIX

A. Government Spending and Taxation

1. 100 Years of Public Spending

2. Current Status - Blue Book Appendices

3. A Look at the Future - Federal Propensities to Spend and to Tax

Why the Growth of Government Spending/Taxation

1. The Sources of Growth of Public Expenditures

2. The Voting Behavior of Bureaucrats and Public Sector Growth

3. Some Disturbing Aspects of Political Entrepreneurship

4. Fiscal Illusion in State/Local Finance.- Taxes are not Prices

5. Taxes in Hawaii - Part of the National Picture

Productivity of Government

1. Rates of Productivity Change vs. Change in Government Expenditures

2. Public vs. Private Provision of Government Services

The Opinions of Californians regarding Taxation and Government Spending -
A Motivational Research Study

The State Personal Income Tax

Unemployment Insurance Compensation Fund Analysis

State Special Fund Analysis

Education Finance and Management

1. The Growth of Educational Bureaucracy

2. The Public School System in Transition

3. The Voucher System - A Legal Analysis

4. California and the Finance of Education - Alternatives in the Wake of
Serrano vs. Priest

5. Summary of Task Force Find ings -and Recommendations for Specific
Changes in Education Finance and Management

Incentive Analysis of Motivation and Incentive Mechanisms for Government
.Employees, Bureaus, Departments and Agencies

Property Taxation Analysis

145
K. Providing the Taxpayer with Better Decision-Making Information

L. Digest of Tax Reform Proposals During the Reagan Administration and Outcone

IV. HISTORY OF THE DEVELOPMENT OF THE REVENUE CONTROL AND TAX LIMITATION PLAN

A. Phase 1 - Pre- Task Force Documents (before 9/1/72)

B. Phase 2 - Preliminary Development (9/1/72 through 12/1-2/72)

C. Phase 3 - Development of Program Design (12/2/72 to final Cabinet
approval 2/7/73?? ?)

D. Phase 4 - Development of the Constitutional Initiative (2/7/73??? through
4/2/73) .

V. DATA & SOURCES - Index of Reference Materials

INDEX — James M. Hall

146

agency system of administration, 7,
14, 67, 72-74, 82, 84, 86, 91,
97, 103, 110
Aid to Families with Dependent

Children (AFDC), 107
American Legion, 30, 40
Angelo, Joe, 58

appointments, by legislature, 50
appointments, by Governor Reagan,

3-6, 7, 8, 14-15, 65-70, 97, 119
confirmation, 100
assembly, 114

attorneys, and government, 3
Austin, Aubrey, 5

123
Brown, Edmund G. , Jr. (Jerry), 7,

26, 121

Brown, Willie, 24, 35
budget, 9, 74-75, 94, 96, 99, 107
Burgener, Clair, 15, 100
Burton, John, 96, 100
Business and Transportation Agency,

7-8, 14, 56
secretary, 65, 70-71, 73-75, 78,

80-81, 83, 91, 98-99.
See also Public Works, Department

Bagley, William T. , 17, 96, 100

Ball, Ed, 28-29

ballot measures, initiative, 106-

107, 120-121
Bank of America, 5, 58
Bank of Finance, L.A. , 44-45, 46-

47, 54

Bank Holding Act, U.S. (1970), 63
Bank of San Marino, 55
bankers, banking, 3-5, 7-8, 31-32,

51-52, 54-55, 57-58
Banking Department, 6-8, 23
44-45, 60, 99

economic development, 46-54

regulation, 32, 54-55, 62-63

State Banking Fund, 78
Battaglia, Philip M. , 2
Bay Area Rapid Transit District

(BART), 81

Beilenson, Anthony, 100
Bell, Pat, 53
Bingham, Stephen, 116
black Americans, 44-45, 47-48, 52-

54, 56-57, 60, 116, 119
Bradley, Tom, 44
Brian, Earl, Jr.,

16, 17, 20-21,

84-85, 104, 109-110, 113, 119,

cabinet, governor's, 9-15, 19-20,

23, 48, 71, 77, 79-88, 117, 120
and welfare reform, 89, 96, 102,

112

cabinet, president's, 102
California Bankers Association, 5,

51
California Job Development

Corporation (Cal-Job), 46-54

technical assistance, 55-58

California Rural Legal Assistance

(CRLA), 59-61
campaign finance, 41
Capen, Dick, 1

Carleson, Robert, 73, 84, 91-93
and welfare reform, 14-19, 95-97,
100, 101-102, 104, 106, 108,
109-110, 112, 118, 123
Carter, Louis, 52, 56
Chamber of Commerce, 105, 119
Chase, Stephen, 5
Christian Anti-Communist Crusade,

38
Citizens Committee for Welfare

Reform, 105

civil service, servants, 72
Clark, William P., 6, 72
Coastal Zone Conservation

147-

Commission, 118
Coke, Earl J. , 11-12, 14-15, 23,

73, 87-88, 104
Collier, Randolph, 74
communism, anti-communism, 33, 34,

38
Comptroller of the Currency, U.S.,

32, 46
computers, 11-12, 75-76

economic data bank, 99
Congress, U.S., 63, 77, 121
conservatives, 3, 11, 33-34, 39-41,

50, 52, 53, 60, 111, 119-120
Cook, Charles, 4
Cooley, Richard, 46
Copley Press, 31
Corrections, Department of, 78,

111, 115-116
courts, 55, 118

federal, 61, 117
Crane, Phil, 11
Cristina, Vernon, 75
Crumpacker, James J., 81-82, 89-90
Cunningham, Alex, 71-72, 101, 111,

114

elections, 1970, 21-22, 67, 102
Ellingwood, Herbert, 77
employment, barriers to, 124-125
environmental quality, policies and
programs, 11, 12, 70, 76, 87,

111, 118

environmentalists, 77
ethics, 54, 76

Family Assistance Program (U.S.

1970), 107
federal government, 67, 77, 79-80,

107, 124

legislation, 63, 108
Fielder, Jerry, 14, 95
Finance, Department of, 9, 14, 20,

24, 78, 89, 93-94, 96-97, 112
Finch, Robert H. , 2, 30, 32, 34,

35-37, 40-42
Firestone, Leonard, 3
Flournoy, Houston, 88
Ford, Ford, 76
Frawley, Pat, 38
freeways. See highways

Deaver, Michael K. , 17, 33, 60, 68-

69, 71, 90, 92, 120
Democratic party, Democrats, 16,

32, 36, 47, 53, 56, 60, 112
Deukmejian, George, 49-50
Dwight, James S. , 14, 94-95

economic development, 46-53, 79-80,

119
Economic Opportunity, Office of,

59-61, 92, 110
economy, in government, 78-79, 84,

95
education, task force, 1970, 13-14,

93-95

Ehrlichman, John, 107
elections, 1960, 30
elections, 1964, 1, 33-37
elections, 1966, 1, 40-42

Gehres, Les, 31

Gillenwaters, Edgar M. , 2, 8-9, 65-

67, 69
Goldwater, Barry, Sr. , 1964

campaign, 33, 36

governor, office of (Ronald Reagan),
6, 13, 15, 21-22, 45, 48, 59-61,
66-67, 117-118, 122
and agencies, 72-74, 84, 92, 98,

102

and Washington, D.C., 67
and welfare reform, 105, 112
Gray, Edwin, 15, 16, 106
Great American First Savings Bank,

Green, Roy, 105, 118-119
Gregovich, Bob, 114
group behavior, 26

148

Haerle, Paul R. , 22

Haldeman, Robert, 2, 35

Hall, James M. , Sr. , 8, 28, 31, 40,

45, 64

Hall, M. , Co., 28
Hall, Mazine (Mrs. James M. , Jr.),

108, 110

Hamilton, Gary, 25-26
Hamilton, Tom, 27, 34, 68, 124
Hamm, Hillard, 52
Hawkins, Robert B. , Jr., 59, 61
Health and Welfare Agency. See

Human Relations Agency
Health, Education and Welfare,

Department of, U.S., 107
Highway Commission, 74-75
Highway Patrol, 11, 75-76, 77, 79
highways, 74

Hobbs, Charles, 15-16, 103
Home Savings and Loan, 8, 64
Housing and Community Development,

Department of, 79

Human Relations Agency, 14, 16, 56,
78, 84

secretary, 97, 101-103, 106, 110,

111, 115
Human Resources Development,

Department of, 61
Hutchinson, Ned, 14-15, 85, 95-96,
103-104

International Business Machines

(IBM), 76
Interracial Council for Business

Opportunity, 55-57
issue memos, Reagan administration,
84

Jackson, George, 115-116
Jenkins, James E. , 16, 106, 107,

114-115

John Birch Society, 38
Jones, Evan, 64
judges, 15

appointment of, 14, 41, 97, 102

Kaye, Peter, 1

Kemp, Bob, 56

Keyes, Robert J. , 44, 48

kitchen cabinet, 4

Klein, Herb, 1, 30-31, 34

labor unions, and politics, 36
Lanterman, Frank, 113-114
legislative analyst, office of, 24,

112
legislature, legislation, 5, 24,

71, 77, 114, 117, 121, 123
environmental, 70
small business, 46-49
welfare reform, 15-18, 96-97,

100, 106-107, 109, 112
liberals, 40-41, 70, 114, 116
Libertarians, 53
lieutenant governor, 76
Livermore, Norman B. , Jr. (Ike),

11-13, 23, 77

lobbying, lobbyists, 66, 77, 123
local government, 14, 77, 121
Los Angeles, 106

black community, 44-45
transit planning, 98
Luce, Gordon C. , 1, 2, 3, 6, 8-9,

22, 41, 45, 48, 61-62, 64-66,

68-69, 71, 74, 80, 91
Luce, Forward, Hamilton & Scripps,

1, 2, 9, 34-35, 40, 68
Lundberg, Louis, 5

Manatt, Charles, 53

Martin, Preston, 80

Martin, Robert, 14, 89-90, 92

McBann, Mike, 80

McKinsey & Co. , 120

McMurray, Tom, 13, 15, 73, 84, 90-

98, 100, 104, 109, 111, 115
Manpower Policy Task Force, 123
Medi-Cal, 109

media, 8, 16, 82, 111, 114-116
Meese, Edwin, III

as executive secretary, 19-23,

149

60-61, 66-68, 85, 101-102, 122-

123

and legal affairs, 77, 93
and welfare reform, 13, 16-18,

90, 92, 94, 97, 105-107
Meeting the Challenge. 104
mental health, state program, 113-

114
mental retardation, state program,

114

Mexican Americans, 45, 48, 57
Mills, James R. , 100, 106
Mills, Ed, 3, 4
Model Cities (federal program), 79-

Moe, James A., 14, 74, 91
Montgomery, Mike, 22
Moretti, Robert, 121
movie/television industry, and

politics, 39
Murphy, George, 39, 41, 69

1964 campaign, 1, 34-38
Music Corporation of America (MCA),

122
mutual aid, 77

National Tax Limitation Committee,

121
Nixon, Richard M.

campaigns, 30, 33, 37

presidency, 67, 86, 91, 107-108
Nofziger, Franklin C. (Lyn), 1, 34

Operation Crossfire, 105n, 107
Opportunities Funding Corporation,

56, 119-120
Orr, Verne, 21, 23, 24, 94, 99,

109, 120
Osborne, Al, 119

Pacific Legal Foundation, 118-119
Parkinson, Gaylord B. , 1 , 33
patronage, 45

Pendleton, Clarence, 45

Perlis, Saul, 7

Planning and Research, Office of,

123

power plants, siting of, 118
Priest, Ivy Baker, 88
prisons, prisoners, 18, 115-118
Procunier, Raymond K. , 115-116
Proposition 1 (1973), tax

limitation, 120
Proposition 13 (1978), property tax

limit, 121

Public Works, Department of, 14,
73-74, 93

division of highways, 71, 74-75,
98

radical organizations, 59

Reagan, Nancy, 39, 69

Reagan, Ronald, before 1964, 19

Reagan, Ronald, campaigns, 1-2, 21-

22, 37-38
Reagan, Ronald, as governor, 8, 39,

61, 124
and cabinet, 20-21, 68-70, 81,

85, 88, 109

and tax reform, 120-121
vetoes, 5, 117
and welfare reform, 13, 16, 92-

93, 95-96, 104, 106, 107, 110,

122

Reagan, Ronald, as president, 90
Reed, Thomas C. , 5, 21
Reinecke, Edwin, 11, 76, 87-88
Republican Assembly, 41
Republican Associates, 32-33
Republican Federated Women, 32
Republican party, Republicans, 17,

22, 30, 47
southern California, 1-2, 31-37,

40-42
Republican State Central Committee,

revolutionaries, 116
Richardson, Elliott, 107-108
Riles, Wilson C., Sr., 93
Roberti, David, 100

150

Rubel, A.C. (Cy), 3

Salinger, Pierre, 1964 campaign,

36-38
San Diego, politics in, 1-2, 31-37,

40-42
San Diego Federal Savings and Loan,

8, 64, 71

Sandstrom, Marc, 71, 91
San Francisco Bay, Southern

Crossing, 81
Savings and Loan, Department of, 7,

Scbeurmann, Bill, 71
Schmidt, Carl, 7, 8
Schmidt, Jim, 64, 71
Schreiber, Taft, 3, 18
Screen Actors Guild, 36
security, 77-78, 115
self-dealing, 54
Senate Rules Committee, 100
Sherriffs, Alex C., 93-94
Smith, C. Arnholt, 31-32
Social Welfare, Deparment of, 16,

102-103, 112. See also welfare

reform

special districts, 98
staff work, 27, 47, 49, 65, 71, 84,

86, 92, 93, 111
Steffes, George, 13, 16, 17, 22,

60, 105, 117, 123
Stubblebine, James, 113
Svahn, Jack, 14, 15, 93, 103, 110

task forces, 13-15, 92-97
Tauf er, Jack L. , 55
tax limitation, 120-122
taxation, taxes, 20, 108, 109
Thompson, Jack, 64
Thornton, Frank, 31
Town Hall, Los Angeles, 106
transition, 1966-1967, 2-4, 6
transportation, 98
Tuttle, Holmes, 3-4, 125

Uhler, Lewis, 59-61, 110-113, 115,

120, 121, 124
Univac (corporation), 76
University of California

law schools, 30, 42

regents, 94
U.S. National Bank, 31-32

Van Camp, Brian, 23, 71
Vandegrift, Lucian, 13, 14, 89-90,

92, 95-97, 102-103
voluntary organizations, volunteers,

in politics, 30
von Damm, Helene, 85

Waldie, Jerome, 63
Walker, Robert C. , 33, 105
Walton, Frank, 23, 120
Walthall, Clyde, 111
Wasserman, Lew, 19
Weinberger, Caspar, 6, 9, 42, 99
welfare reform, 23, 78, 89-91
implementation, 101-109, 112
legislation, 16, 18, 100, 106-

107, 123
task force, 1970, 13-15, 92-93,

95-96, 104
welfare rights organizations,

118-119

Wells Fargo Bank, 7, 46
Western Governors Conference, 1971,

Williams, Carl, 14, 93, 103
Wilson, Peter, 1, 30-31, 33, 34,

42, 118

World War II, 27
work experience program, 107-108,

125

Youth Authority, 116

Zumbrun, Ronald A., 14, 15, 93

103, 110, 112-113, 118-119/123

RONALD REAGAN GUBERNATORIAL ERA. 1966-1974
Government History Documentation Project

The Ronald Reagan Gubernatorial Era Project was carried out by University of
California at Berkeley in cooperation with University of California at Los
Angeles. University of California at Davis, California State University at
Fullerton, and Qaremont Graduate School. Interviews are grouped by the
institution which produced them.

UNIVERSITY OF CALIFORNIA AT BERKELEY

Single Interview Volumes:

B re slow, Lester. Vision and Reality in State Health Care; Medi-Cal and
Other Public Programs. 1946-1975. 1985. 96 pp.

Carleson, Robert. Stemming the Welfare Tide. 1986, 107 pp.
Deaver, Michael. In process.

Dumke, Glenn S. The Evolution of the California State University System,
1961-1982. 1986, 89 pp.

Dunckel, Earl B. Ronald Reagan and the General Electric Theatre. 1954-1955.
1982, 46 pp.

Gianelli, William. The California State Department of Water Resources,
1967-1973. 1986. 86 pp.

Hall, James M. Supporting Reagan; From Banks to Prisons. 1986, 157 pp.

Livermore, Norman B., Jr. Man in the Middle: High Sierra Packer,

Timberman, Conservationist, and California Resources Secretary. 1983,
285 pp.

Livingston, Donald G. Program and Policy Development in Consumer Affairs
and the Governor's Office. 1986, 90 pp.

Meese, Edwin, III. In process.

Reinecke, Ed. Maverick Congressman and Lieutenant Governor for California,
1965-1974. 1986. 100 pp.

Riles, Wilson C. "No Adversary Situations"; Public School Education in

California and Wilson C. Riles, Superintendent of Public Instruction.
1970-1982. 1984, 134 pp.

Way, Howard K. Issues in Corrections; The Adult Authority. Determinate
Sentencing, and Prison Crowding. 1962-1982. 1986, 68 pp.

Williams. Spencer M. The Human Relations Agency; Perspectives and Programs
Concerning Health. Welfare, and Corrections, 1966-1970. 1986. 94 pp.

Multiple Interview Volumes:

Appointments. Cabinet Management, and Policy Research for Governor Ronald
Reagan. 1967-1974. 1983. 232 pp.

Adams, Winfred. "Strategies for Republican Elections. State Government

Management, and Water Resources, 1963-1976."
Hearle. Paul R. "Ronald Reagan and Republican Party Politics in

California. 1965-1968."

Martin, Jerry C. "Information and Policy Research for Ronald Reagan,
1969-1975."

The Art of Corrections Management. California 1967-1974. 1984, 146 pp.
Breed, Allen F. "Theory and Practice in Juvenile Justice."
Procunier, Raymond K. "Administering Your Prisons."

The Assembly, the State Senate, and the Governor's Office. 1958-1974.
1982. 490 pp.

Bagley. William. "Some Complexities of Social Progress and Fiscal

Reform. "
Mills. James R. "A Philosophical Approach to Legislative and Election

Realities, 1959-1981."
Monagan, Robert T. "Increasing Republican Influence in the State

Assembly."
Rodda, Albert. "Sacramento Senator: State Leadership in Education and

Finance. "

California State Department of Finance and Governor Ronald Reagan.
1986. 125 pp.

Beach. Edwin W. "Some Technical and Political Aspects of State

Budgeting. "

Bell, Roy M. "Revenue Policies and Political Realities."
Dwight, James S. "Early Reagan Administration Perspectives on State
Finance, 1966-1967."

Citizen Advocacy Organizations. 1960-1975. 1987, 210 pp.

Canson, Virna. "Waging the War on Poverty and Discrimination in

California through the NAACP, 1953-1974."

Connolly, Margarete. "Speaking Out for Retarded Citizens."
Heine, Caroline. "Building a Basis for Change: California's

Commission on the Status of Women."
Miller, Anita. "'The Tide of the Times Was With Us1: Women's Issues

and the California Commission on the Status of Women."

Democratic Party Politics and Environmental Issues in California, 1962-1976.
1986. 101 pp.

Boas, Roger. "Democratic State Central Committee Chairman, 1968-1970."
Warren, Charles. "From the California Assembly to the Council on
Environmental Quality, 1962-1979: The Evolution of an
Environmentalist. "

Governor Reagan and His Cabinet; An Introduction. 1986, 174 pp.

Luce, Gordon. "A Banker's View of State Administration and Republican

Politics."
Orr, Verne. '^Business Leadership in the Department of Motor Vehicles

and State Finance."
Reagan, Ronald. "On Becoming Governor."

Governor Reagan's Cabinet and Agency Administration. 1986, 213 pp.

Brian, Earl W. "Health and Welfare Policy, 1970-1974: A Narrow

Spectrum of Debate."
Stearns, James G. "Joining Reagan's Campaign in Sacramento:

Conservation, Agriculture, and Employee Relations."
Thomas, Edwin W. , Jr. "The Governor's Cabinet as Policy Forum."
Walton, Frank J. "Transportation Policies and the Politics of

Conservation, 1964-1974."

The Governor's Office: Access and Outreach. 1967-1974. 1987, 132 pp.

Bradley, Melvin. "Facilitating Minority Input on State Policy, 1970-

1974."

Habecker, Jackie. "A View from the Reception Desk."
Magyar, Roger. "Governor Reagan's Task Forces on Tax Reduction and

Local Government."

The Governor's Office and Public Information, Education, and Planning,
1967-1974. 1984. 301 pp.

Beck, Paul. "From the Los Angeles Times to the Executive Press Office,

1967-1972."

Hannaford, Peter. "Expanding Political Horizons."
Sherriffs, Alex C. "Education Advisor to Ronald Reagan and State

University Administrator, 1969-1982."

Tooker, John S. "Director of the Office of Planning and Research, and
Legislative Assistant, 1967-1974."

Internal and External Operations of the California Governor's Office,
1966-1974. 1985, 235 pp.

Gillenwaters, Edgar. "Washington Office Troubleshooter and Advocate

for Commerce in California, 1967-1973."
Jenkins, James. "Public Affairs, Welfare Concerns in Washington and

Sacramento. "

Procunier, Florence Randolph. "Working with Edwin Meese."
Walker, Robert. "Political Advising and Advocacy for Ronald Reagan,

1965-1980."
Walton, Rus. "Turning Political Ideas into Goverment Program."

Issues and Innovations in the 1966 Republican Gubernatorial Campaign.
1980. 187 pp.

Nofziger. Franklyn C. "Press Secretary for Ronald Reagan, 1966."
Parkinson. Gaylord B. "California Republican Party Official,

1962-1967."
Roberts, William E. "Professional Campaign Management and the

Candidate. 1960-1966."
Spencer. Stuart K. "Developing a Campaign Management Organization."

Law Enforcement and Criminal Justice in California. 1966-1974. 1985.
300 pp.

Ellingwood, Herbert. "Law Enforcement Planning and Coordination.

1969-1974."
Gunterman, Joseph F. "Sacramento Advocate for the Friends Committee on

Legislation of California."
Houghton, Robert A. "Law Enforcement Planning in the Reagan

Administration, 1971-1974."
Marinissen, Jan. "'To Let the Legislature Know1: Prison Advocacy and

the American Friends Service Committee in California. 1960-1983."
Palumbo, Anthony L. "Law Enforcement, Emergency Planning, and the

California National Guard, 1965-1974."

Legislative Issue Management and Advocacy, 1961-1974. 1983, 315 pp.
Cory, Ken. "Education Consultant and Assemblyman, 1961-1974."
Hall, Kenneth. "'Playing Devil's Advocate1: The Governor's Office and

the Department of Finance in California, 1966-1974."
Kehoe, John. "Advocacy for Education, Consumerism, and Governor Ronald

Reagan. 1966-1974."
Miller, John. "Issues of Criminal Justice and Black Politics in

California. 1966-1974."
Sturgeon, Vernon. "State Senator, Reagan Advisor, and PUC

Commissioner, 1960-1974."

Organizational and Fiscal Views of the Reagan Administration. 1984, 183 pp.
King, Warren. "Governor Reagan's Use of Task Forces and Loaned

Executives, 1966-1968."

Lucas, Harry. "New Approaches to Vocational Rehabilitation."
Post, A. Alan. "Public Aims and Expenditure: A Divergent View."
Volk, Robert, Jr. "Government Reform and the Maturity of the Political

Process. "

Poverty Programs and Other Conservative Policy Strategies, 1970-1984.
1986, 110 pp.

Checkering. A. Lawrence

Hawkins, Robert B. , Jr.

Republican Campaigns and Party Issues, 1964-1976. 1986, 201 pp.

Cristina, Vernon J. "A Northern Californian Views Conservative

Politics and Policies. 1963-1970."

McDowell, Jack S. "Press Work and Political Campaigns, 1966-1970."
Todd. A. Ruric. "Experience and Advice for the Reagan Administration,

1966-1968."
Watts, Skip (Norman). "Observations of a Youthful Political Pro."

Republican Philosophy and Party Activism. 1984, 142 pp.

Hume, Jaquelin. 'Basic Economics and the Body Politic: Views of a

Northern California Reagan Loyalist."
del Junco, Tirso. "California Republican Party Leadership and Success,

1966-1982."
Storrs, Eleanor Ring. "Parties, Politics, and Principles: 'It's at

the Local Level.1"
Wrather, Jack. "On Friendship, Politics, and Government."

The San Francisco Bay Conservation and Development Commission, 1964-1973.
1986, 98 pp.

Bodovitz, Joseph E. "Management and Policy Directions."

Lane, Melvin B. "The Role of the Chairman in Setting and Maintaining

Goals. "

Shute, E. Clement, Jr. "The Place of the Courts in the Solution of
Controversial Policy Issues."

San Francisco Republicans. 1980, 160 pp.

Christopher, George. "Mayor of San Francisco and Republican Party

Candidate."
Weinberger, Caspar. "California Assembly, Republican State Central

Committee, and Elections, 1953-1966."

Services for Californians; Executive Department Issues in the Reagan
Administration. 1967-1974. 1986, 240 pp.

Camilli, Richard L. "Health Care Reform and Staff Development,

1969-1974."
Carter, Louis. "Piloting Assistance to Small and Minority Businesses,

1969-1975."

Lowry, James V. "State Mental Health Services, 1967-1971."
Mott, William Penn, Jr. "Managing the California State Park System,

1967-1974."
Swoap, David. "The Continuing Story of Welfare Reform, 1965-1983"

UNIVERSITY OF CALIFORNIA AT LOS ANGELES

Beilenson, Anthony C. Securing Liberal Legislation During the Reagan
Administration. 1982, 81 pp.

Burke, Yvonne Brathwaite. New Arenas of Black Influence. 1982, 46 pp.

Dales, Jack. Pragmatic Leadership; Ronald Reagan as President of the
Screen Actors Guild. 1982. 49 pp.

Darling. Dick. Republican Activism; The California Republican Assembly and
Ronald Reagan. 1981. 56 pp.

Dunne. George H. Christian Advocacy and Labor Strife in Hollywood.
1981. 67 pp. "

Hog, Stanley. More than Just an Actor; The Early Campaigns of Ronald
Reagan. 1981, 29 pp.

Reagan, Neil. Private Dimensions and Public Images; The Early Political
Campaigns of Ronald Reagan. 1981, 58 pp.

Younger, Evelle J. A Lifetime in Law Enforcement. 1982, 60 pp.
Watson, Philip E. In process.

CALIFORNIA STATE UNIVERSITY AT FULLERTON

Finch. Robert H. Views From the Lieutenant Governor's Office.
1983, 107 pp.

Wright, Donald. A View of Reagan and the California Courts. 1984, 87 pp.

The "Kitchen Cabinet"; Four California Citizen Advisers of Ronald Reagan.
1983, 157 pp.

Dart, Justin

Mills, Edward

Salvatori, Henry

Tut tie. Holmes

Legislative-Governor Relations in the Reagan Years; Five Views.

1983. 277 pp.

Beverly. Robert. "Reflections of a Republican Assemblyman."
Carpenter, Dennis E. "Republican State Committee Chair and Senator."
Cologne, Gordon. "Water Policy in the Reagan Years."
Moretti, Robert. "Recollections of an Assembly Speaker."
Zenovich, George. "Senate Democrat in the Reagan Government."

CLAREMONT GRADUATE SCHOOL

Busterud, John A. The California Constitution Revision Commission.
1982, 37 pp.

Flournoy, Houston I. California Assemblyman and Controller. 1982, 235 pp.

The History of Proposition #1; Precursor of California Tax Limitation

Measures. 1982, 102 pp.

Stubblebine, William Craig. "The Development of Proposition #1."
Uhler. Lewis K. "Chairman of Task Force in Tax Reduction."

UNIVERSITY OF CALIFORNIA AT DAVIS

Coke, J. Earl. Reminiscences of People and Change in California
Agriculture. 1900-1975. 1976, 265 pp.

Participating Institutions

Oral History Office, Department of Special Collections, Library, University
of California, Davis, California, 95616.

Oral History Program, California State University, Library 243, Fullerton,
California, 92634.

Oral History Program, daremont Graduate School, Qaremont, California,
91711.

Oral History Program, Powell Library Building, University of California, Los
Angeles, California. 90024.

Regional Oral History Office. 486 The Bancroft Library, University of
California, Berkeley, California, 94720.

Gabrielle Morris

Graduate of Connecticut College, New London,
in economics; independent study in
journalism and creative writing; additional
study at Trinity College and Stanford University.

Historian, U.S. Air Force, documenting Berlin
Air Lift, other post-World War II issues.
Public relations and advertising for retail
and theater organizations in Connecticut.
Research, writing, policy development on
Bay Area community issues for University of
California, Bay Area Council of Social Planning,
Berkeley Unified School District, and others.

Interviewer-editor, Regional Oral History
Office, The Bancroft Library, 1970-
Emphasis on local community and social history;
and state government history documentation
focused on selected administrative, legislative,
and political issues in the gubernatorial
administrations of Earl Warren, Goodwin Knight,
Edmund G. Brown, Sr. , and Ronald Reagan.

1980- , director, Reagan Gubernatorial
Era Project.

135969

U. C. BERKELEY LIBRARIES

C D 1 1 1 1, D 4 I 7

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